<PAGE>
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 October 8, 1994
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 1-4455
DOLE FOOD COMPANY, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
HAWAII 99-0035300
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
31355 Oak Crest Drive
Westlake Village, California 91361
-----------------------------------------------------
(Address of principal executive offices and zip code)
(818) 879-6600
-----------------------------------------------------
(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 November 4, 1994
- ----------------------- --------------------------------------
Common Stock, without 59,478,108
par value
<PAGE>
DOLE FOOD COMPANY, INC.
Index
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Income -- quarter and
three quarters ended October 8, 1994 and
October 9, 1993......................................... 3-4
Consolidated Balance Sheet -- October 8, 1994 and
January 1, 1994......................................... 5
Consolidated Statement of Cash Flow -- three quarters
ended October 8, 1994 and October 9, 1993............... 6
Notes to Consolidated Financial Statements.............. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 8-11
Part II. Other Information
Item 5. Other Information..................................... 12
Item 6. Exhibits and Reports on Form 8-K...................... 12-14
Signatures..................................................... 15
</TABLE>
-2-
<PAGE>
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(in 000s, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------
October 8, October 9,
1994 1993
------------ -------------
<S> <C> <C>
Revenue $1,081,362 $1,005,791
Cost of products sold 920,821 856,588
---------- ----------
Gross margin 160,541 149,203
Selling, marketing and administrative
expenses 128,431 113,494
---------- ----------
Operating income 32,110 35,709
Interest expense (28,071) (20,837)
Interest income 3,153 3,230
Other expense - net (5,607) (7,699)
---------- ----------
Income before income taxes 1,585 10,403
Income taxes (300) (5,300)
---------- ----------
Net income $ 1,285 $ 5,103
========== ==========
Earnings per common share $.02 $.09
========== ==========
Average number of common shares outstanding 59,692 59,728
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(in 000s, except per share amounts)
<TABLE>
<CAPTION>
Three Quarters Ended
-------------------------
October 8, October 9,
1994 1993
----------- -----------
<S> <C> <C>
Revenue $2,887,091 $2,635,932
Cost of products sold 2,412,477 2,195,631
---------- ----------
Gross margin 474,614 440,301
Selling, marketing and administrative
expenses 323,120 278,929
---------- ----------
Operating income 151,494 161,372
Interest expense (65,556) (54,840)
Interest income 8,411 9,421
Gain on sale of 18% of common stock
of subsidiary - 30,853
Other expense - net (7,762) (15,789)
---------- ----------
Income before income taxes 86,587 131,017
Income taxes (19,900) (33,000)
---------- ----------
Net income $ 66,687 $ 98,017
========== ==========
Earnings per common share $1.12 $1.64
========== ==========
Average number of common shares outstanding 59,696 59,725
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
DOLE FOOD COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(in 000s)
<TABLE>
<CAPTION>
October 8, January 1,
1994 1994
(Unaudited) (Audited)
------------ -----------
<S> <C> <C>
Current assets
Cash and short-term investments $ 52,345 $ 37,497
Receivables - net 482,159 407,554
Inventories
Finished products 209,777 213,753
Raw materials and work in progress 94,321 160,635
Growing crop costs 36,073 38,509
Packing materials 81,055 69,843
Operating supplies and other 76,495 70,688
Real estate development inventory 130,829 105,900
Prepaid expenses 46,422 37,970
---------- ----------
Total current assets 1,209,476 1,142,349
Real estate developments 333,523 288,217
Investments 63,566 34,071
Property, plant and equipment - net 1,911,066 1,767,089
Long-term receivables - net 61,762 70,653
Other assets 110,228 85,540
---------- ----------
$3,689,621 $3,387,919
========== ==========
Current liabilities
Notes payable $ 47,971 $ 64,050
Current portion of long-term debt 7,475 14,612
Accounts payable and accrued liabilities 575,672 581,490
---------- ----------
Total current liabilities 631,118 660,152
Long-term debt 1,443,314 1,158,297
Deferred income taxes and other long-term
liabilities 441,191 430,014
Minority interests 80,716 87,342
Common shareholders' equity
Common stock 320,121 320,099
Additional paid-in capital 165,454 164,908
Retained earnings 645,417 596,573
Cumulative foreign currency translation
adjustment (37,710) (29,466)
---------- ----------
Total common shareholders' equity 1,093,282 1,052,114
---------- ----------
$3,689,621 $3,387,919
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
(in 000s)
<TABLE>
<CAPTION>
Three Quarters Ended
-------------------------
October 8, October 9,
1994 1993
----------- -----------
<S> <C> <C>
Operating activities
Net income $ 66,687 $ 98,017
Adjustments to net income
Depreciation and amortization 109,735 95,331
Equity earnings, net of distributions (1,761) (2,328)
Gain on sale of subsidiary stock - (30,853)
Other 15,369 16,769
Change in operating assets and liabilities
Receivables - net (78,800) (26,468)
Inventories 64,193 62,981
Prepaid expenses (8,360) (15,917)
Real estate developments (70,712) (25,928)
Accounts payable and accrued liabilities (11,155) 1,407
Other (43,255) (20,554)
--------- ---------
Cash flow from operations 41,941 152,457
Investing activities
Capital additions (173,683) (151,193)
Purchase price of investments and
acquisitions (net of acquired cash) (91,937) (19,703)
Other 4,146 9,547
--------- ---------
Cash flow used by investing activities (261,474) (161,349)
Financing activities
Short-term repayments - net (16,753) (48,880)
Long-term borrowings (repayments) - net 268,409 (22,043)
Cash dividends paid (17,843) (17,837)
Net proceeds on sale of subsidiary common stock - 73,595
Other 568 1,264
--------- ---------
Cash flow from (used by) financing
activities 234,381 (13,901)
--------- ---------
Increase (decrease) in cash and short-term
investments 14,848 (22,793)
Cash and short-term investments at beginning
of period 37,497 57,272
--------- ---------
Cash and short-term investments at end of period $ 52,345 $ 34,479
========= =========
Supplemental cash flow data
- ---------------------------
Cash paid (received) during the three quarters for:
Interest $ 68,253 $ 44,684
Income taxes (993) 21,073
</TABLE>
See Notes to Consolidated Financial Statements.
-6-
<PAGE>
DOLE FOOD COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying unaudited consolidated
financial statements of Dole Food Company, Inc. (the "Company") include all
adjustments necessary to present fairly its financial position as of
October 8, 1994, its results of operations for the quarter and three
quarters then ended, and cash flows for the three quarters then ended.
Interim results are subject to significant seasonal variations and are not
necessarily indicative of the results of operations for a full year.
2. During the first three quarters of 1994 and 1993, the Company declared and
paid approximately $17.8 million of cash dividends on its common stock,
which represented the regular first, second and third quarterly dividends
of 10 cents per share.
3. Certain prior year amounts have been reclassified to conform to the 1994
presentation.
-7-
<PAGE>
DOLE FOOD COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flow from operations was $42 million for the first three quarters of 1994
compared to $152 million for the first three quarters of 1993. The decrease was
primarily due to higher receivable levels as a result of increased sales, and
increased spending for real estate developments.
Cash flow from financing activities was $234 million for the first three
quarters of 1994 compared to $14 million of cash flow used by financing
activities for the same period in 1993. Higher investing activities and lower
cash flow from operations increased the Company's external borrowings during the
first three quarters of 1994 compared to the first three quarters of 1993. In
addition, cash flow used by financing activities during 1993 reflects the
proceeds from the sale of 18% of the common stock of Castle & Cooke Homes, Inc.
which were used to repay certain short-term and long-term debt in 1993.
At October 8, 1994, the Company had in excess of $300 million of borrowing
capacity under a $1 billion credit facility which expires in 1999.
On October 24, 1994, the Company entered into a definitive merger agreement with
Castle & Cooke Homes, Inc., pursuant to which a wholly-owned subsidiary of the
Company, Dole Acquisition Corporation, would acquire the 17.2% of Castle & Cooke
Homes' stock not already owned by the Company for $15.75 per share in cash.
Dole Acquisition Corporation commenced a tender offer for any and all shares of
Castle & Cooke Homes' common stock not already owned by the Company for a total
purchase price of approximately $81 million. The offer is conditioned upon a
majority of the outstanding common stock not owned by the Company being validly
tendered. In the merger which will follow the closing of the tender offer, any
shares not tendered will be converted into the right to receive $15.75 per share
in cash. Total funds necessary to purchase the outstanding shares of Castle &
Cooke Homes will be provided by the Company's existing credit facilities. In
addition, the Company intends to refinance amounts outstanding under the Castle
& Cooke Homes' $135 million credit agreement with lower interest rate borrowings
from the Company's $1 billion credit facility. At October 8, 1994, Castle &
Cooke Homes had borrowings of $80 million under their existing $135 million
credit facility which will be terminated upon repayment of the outstanding
balance.
Cash and short-term investments totaled approximately $52 million at October 8,
1994.
-8-
<PAGE>
DOLE FOOD COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
- --------------------------------------------
Capital expenditures for the first three quarters of 1994 totaled approximately
$174 million, of which $152 million was invested in the Company's food
operations for infrastructure, further development and modernization of new and
existing facilities, and new vessels. The Company acquired 35% of a produce
distribution company located in the United Kingdom as well as various other food
and food related operations. In addition, at the beginning of the year the
Company purchased three commercial real estate properties.
RESULTS OF OPERATIONS
- ---------------------
For the first three quarters of 1994, the Company reported net income of $66.7
million or $1.12 per share, compared to $67.0 million or $1.12 per share for the
first three quarters of 1993 before a non-recurring first quarter pre-tax gain
of approximately $31 million related to the sale of 18% of the common stock of
Castle & Cooke Homes, Inc. and a second quarter pre-tax gain of $9.4 million
from the sale of the Company's interest in the California and Hawaiian Sugar
Company ("C&H gain"). Net income for the first three quarters of 1993,
including the above mentioned items, was $98.0 million or $1.64 per share.
Net income for the third quarter of 1994 was $1.3 million, or 2 cents per share,
compared to $5.1 million, or 9 cents per share, for the same quarter of 1993.
Revenues for the first three quarters of 1994 and 1993 totaled $2.9 billion and
$2.6 billion, respectively. The Company's third quarter 1994 revenue was $1.1
billion compared to $1.0 billion for the comparable quarter of last year. The
increase in revenues was primarily attributable to higher fresh fruit sales and
the effects of acquisitions which occurred in 1993.
Operating income for the Company's food operations, net of corporate general and
administrative expenses, totaled $129.0 million for the first three quarters of
1994 compared to $144.5 million before the C&H gain in 1993. For the third
quarter of 1994, operating income from food operations, net of corporate general
and administrative expenses, totaled $20.0 million compared to $32.0 million in
1993. Improved banana results in 1994 were impacted by weakness in the Pacific
Rim banana market during the third quarter, resulting from an oversupply of
product. The Company's fresh vegetable operations reported a decrease in year-
to-date 1994 results, primarily due to lower lettuce and celery
-9-
<PAGE>
DOLE FOOD COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
- ---------------------------------
prices. Although third quarter 1994 celery prices were up over the prior year,
overall quarterly results for fresh vegetables were down primarily due to lower
lettuce prices. Results for 1994 were also affected by weakness in the dried
fruit and nut operations as well as price pressures which continued to
negatively impact processed pineapple earnings. The supply imbalance in the
Pacific Rim banana market and price pressures on processed pineapple have
continued in the fourth quarter of 1994.
Selling, marketing and administrative expenses for the first three quarters of
1994 and for the third quarter of 1994 were higher than in the comparable
periods of the previous year due to new businesses acquired in 1993, plus
additional promotions for new products and marketing programs for the fresh
vegetable and packaged foods operations.
Operating income for Castle & Cooke Homes, Inc. totaled $40.0 million in the
first three quarters of 1994, compared to $34.3 million for the same period of
1993. Third quarter operating income totaled $18.7 million and $13.0 million
for 1994 and 1993, respectively. The increase in 1994 year-to-date and third
quarter earnings was primarily attributable to a change in the overall sales mix
which resulted in higher average sales prices and operating income in Hawaii.
Year-to-date operating income for the Company's commercial real estate
operations increased to $9.0 million in 1994 from $2.1 million in 1993, while
third quarter operating income increased to $3.9 million in 1994 from $2.0
million in 1993. The increase was primarily attributable to earnings from
commercial properties acquired at the end of 1993 and beginning of 1994 and
commercial lot sales in Hawaii.
The Lana'i resort operations achieved improved occupancy rates contributing to a
reduced operating loss before depreciation of $13.6 million for the first three
quarters of 1994 as compared to a $16.9 million loss for the same period in
1993. Operating loss before depreciation was $6.0 million for the third quarter
of 1994 and $7.3 million for the comparable period of 1993. Depreciation
expense was $12.9 million and $12.0 million for the first three quarters of 1994
and 1993, respectively.
-10-
<PAGE>
DOLE FOOD COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
- ---------------------------------
Interest expense, net of capitalized interest, increased to $65.6 million for
the first three quarters of 1994 from $54.8 million in 1993, and to $28.1
million for the third quarter of 1994 from $20.8 million for the third quarter
of 1993, primarily attributable to higher average debt levels.
The Company's year-to-date effective income tax rate decreased to 23% in 1994
from 25% in 1993. As a result of the higher federal income tax rates enacted in
August 1993, the Company retroactively provided, during the third quarter of
1993, additional income tax expense on its 1993 first half earnings and recorded
a one-time non-cash charge of $2.5 million related to its net deferred tax
liability.
-11-
<PAGE>
PART II. OTHER INFORMATION
DOLE FOOD COMPANY, INC.
Item 5. Other Information
On October 24, 1994, the Company entered into a definitive merger agreement with
Castle & Cooke Homes, Inc., pursuant to which a wholly-owned subsidiary of the
Company, Dole Acquisition Corporation, would acquire the 17.2% of Castle & Cooke
Homes' stock not already owned by the Company for $15.75 per share in cash.
Dole Acquisition Corporation commenced a tender offer for any and all shares of
Castle & Cooke Homes' common stock not already owned by the Company for a total
purchase price of approximately $81 million. The offer is conditioned upon a
majority of the outstanding common stock not owned by the Company being validly
tendered. In the merger which will follow the closing of the tender offer, any
shares not tendered will be converted into the right to receive $15.75 per share
in cash. The funds necessary to purchase the outstanding shares of Castle &
Cooke Homes will be provided by the Company's existing credit facilities.
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
Page
Number
------
(a) Exhibits:
Exhibit
No.
-------
<C> <S> <C>
10.1 Offer to Purchase dated October 31, 1994. Incorporated by
reference to Exhibit (a)(1) to the Company's Schedule 14 D-1
filed on October 31, 1994, Commission File No. 5-45530.
10.2 Agreement and Plan of Merger by and among the Company, Dole
Acquisition Corporation and Castle & Cooke Homes, Inc., dated as
of October 24, 1994. Incorporated by reference to Exhibit (c)(1)
to the Company's Schedule 14 D-1 filed on October 31, 1994,
Commission File No. 5-45530.
11 Computations of earnings per common
share.............................................................. 13-14
27 Financial data schedule
</TABLE>
(b) No reports on Form 8-K were filed for the quarter ended October 8, 1994.
-12-
<PAGE>
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.
DOLE FOOD COMPANY, INC.
Registrant
November 21, 1994 /s/ ALAN B. SELLERS
By __________________________
Alan B. Sellers
Executive Vice President -
Chief Financial Officer
/s/ PATRICIA A. MCKAY
By ___________________________
Patricia A. McKay
Vice President - Controller
-15-
<PAGE>
EXHIBIT 11
DOLE FOOD COMPANY, INC.
Computations of Earnings per Common Share
(Unaudited)
(in 000s, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------
October 8, October 9,
1994 1993
-------------- -------------
<S> <C> <C>
PRIMARY
Net income applicable to common shares........ $ 1,285 $ 5,103
======= =======
Average number of common shares outstanding
during the period........................... 59,477 59,451
Add:
Shares issuable upon exercise of stock
options at average prices during the
period................................... 215 277
------- -------
Total primary shares....................... 59,692 59,728
======= =======
Primary earnings per common share $ .02 $ .09
======= =======
FULLY DILUTED
Net income applicable to common shares
and dilutive securities...................... $ 1,285 $ 5,103
======= =======
Average number of common shares outstanding
during the period........................... 59,477 59,451
Add:
Shares issuable upon exercise of stock
options at higher of average prices
or end of period prices.................. 215 277
------- -------
Total fully diluted shares................ 59,692 59,728
======= =======
Fully diluted earnings per common share........ $ .02 $ .09
======= =======
</TABLE>
-13-
<PAGE>
EXHIBIT 11
(Continued)
DOLE FOOD COMPANY, INC.
Computations of Earnings per Common Share
(Unaudited)
(in 000s, except per share amounts)
<TABLE>
<CAPTION>
Three Quarters Ended
----------------------------
October 8, October 9,
1994 1993
------------- -------------
<S> <C> <C>
PRIMARY
Net income applicable to common shares...... $66,687 $98,017
======= =======
Average number of common shares outstanding
during the period.......................... 59,470 59,436
Add:
Shares issuable upon exercise of stock
options at average prices during the
period.................................. 226 289
------- -------
Total primary shares...................... 59,696 59,725
======= =======
Primary earnings per common share $ 1.12 $ 1.64
======= =======
FULLY DILUTED
Net income applicable to common shares
and dilutive securities.................... $66,687 $98,017
======= =======
Average number of common shares outstanding
during the period.......................... 59,470 59,436
Add:
Shares issuable upon exercise of stock
options at higher of average prices
or end of period prices................. 226 289
------- -------
Total fully diluted shares............... 59,696 59,725
======= =======
Fully diluted earnings per common share........ $ 1.12 $ 1.64
======= =======
</TABLE>
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS<F1>
<FISCAL-YEAR-END> DEC-31-1994<F2>
<PERIOD-START> JAN-02-1994<F2>
<PERIOD-END> OCT-08-1994<F1>
<CASH> 52,345
<SECURITIES> 0
<RECEIVABLES> 348,112
<ALLOWANCES> 24,465
<INVENTORY> 497,721
<CURRENT-ASSETS> 1,209,476
<PP&E> 2,494,269
<DEPRECIATION> 583,203
<TOTAL-ASSETS> 3,689,621
<CURRENT-LIABILITIES> 631,118
<BONDS> 1,443,314
<COMMON> 320,121
0
0
<OTHER-SE> 773,161
<TOTAL-LIABILITY-AND-EQUITY> 3,689,621
<SALES> 2,887,091
<TOTAL-REVENUES> 2,887,091
<CGS> 2,412,477
<TOTAL-COSTS> 2,412,477
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,556
<INCOME-PRETAX> 86,587
<INCOME-TAX> 19,900
<INCOME-CONTINUING> 66,687
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,687
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.12
<FN>
<F1>ALL QUARTERS IN 1994 HAVE 12 WEEKS, EXCEPT THE THIRD QUARTER OF 1994 WHICH
HAS 16 WEEKS. YEAR TO DATE 3RD QUARTER OF 1994 CONSISTED OF 40 WEEKS AND
ENDED ON OCTOBER 8, 1994.
<F2>THE COMPANY'S FISCAL YEAR ENDS ON THE SATURDAY CLOSEST TO DECEMBER 31.
FISCAL YEARS 1994 AND 1993 EACH CONSISTS OF 52 WEEKS AND ENDS ON DECEMBER
31, 1994 AND JANUARY 1, 1994.
</FN>
</TABLE>
