<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 June 17, 1995
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 July 14, 1995
- ----------------------- ---------------------------------------------------
Common Stock, without 59,785,685
par value
<PAGE>
DOLE FOOD COMPANY, INC.
Index
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income -- quarters and
half years ended June 17, 1995 and June 18, 1994..... 3-4
Consolidated Balance Sheets -- June 17, 1995 and
December 31, 1994.................................... 5
Consolidated Statements of Cash Flow -- half years
ended June 17, 1995 and June 18, 1994................ 6
Notes to Consolidated Financial Statements........... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...... 8-10
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security
Holders............................................ 11
Item 5. Other Information.................................. 11
Item 6. Exhibits and Reports on Form 8-K................... 11-13
Signatures.................................................. 14
</TABLE>
-2-
<PAGE>
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in 000s, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended
------------------------
June 17, June 18,
1995 1994
----------- ----------
<S> <C> <C>
Revenue $1,152,001 $986,462
Cost of products sold 954,515 818,868
---------- --------
Gross margin 197,486 167,594
Selling, marketing and administrative
expenses 114,557 103,348
---------- --------
Operating income 82,929 64,246
Interest expense (23,537) (19,322)
Interest income 1,581 2,644
Other expense - net (2,966) (1,215)
Net gain on assets sold or held for disposal 61,655 -
---------- --------
Income before income taxes 119,662 46,353
Income taxes (41,000) (10,700)
---------- --------
Net income $ 78,662 $ 35,653
========== ========
Earnings per common share $ 1.32 $ .60
========== ========
Average number of common shares outstanding 59,698 59,679
========== ========
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in 000s, except per share amounts)
<TABLE>
<CAPTION>
Half Year Ended
-------------------------
June 17, June 18,
1995 1994
----------- -----------
<S> <C> <C>
Revenue $2,077,349 $1,804,929
Cost of products sold 1,722,470 1,490,856
---------- ----------
Gross margin 354,879 314,073
Selling, marketing and administrative
expenses 216,366 194,689
---------- ----------
Operating income 138,513 119,384
Interest expense (50,458) (37,485)
Interest income 4,287 5,258
Other expense - net (3,614) (2,155)
Net gain on assets sold or held for disposal 61,655 -
---------- ----------
Income before income taxes 150,383 85,002
Income taxes (48,100) (19,600)
---------- ----------
Net income $ 102,283 $ 65,402
========== ==========
Earnings per common share $ 1.71 $ 1.10
========== ==========
Average number of common shares outstanding 59,705 59,704
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
DOLE FOOD COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(in 000s)
<TABLE>
<CAPTION>
June 17, December 31,
1995 1994
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
Current assets
Cash and short-term investments $ 51,590 $ 46,566
Receivables - net 551,185 510,221
Inventories
Finished products 198,409 205,922
Raw materials and work in progress 73,390 138,152
Growing crop costs 37,508 36,605
Packing materials 106,356 96,729
Operating supplies and other 95,698 80,992
Real estate development inventory 174,043 183,492
Prepaid expenses 51,626 47,320
---------- ----------
Total current assets 1,339,805 1,345,999
Real estate developments 350,135 341,526
Investments 65,632 65,633
Property, plant and equipment - net 1,684,893 1,926,453
Long-term receivables - net 52,764 54,487
Other assets 91,710 114,584
---------- ----------
$3,584,939 $3,848,682
========== ==========
Current liabilities
Notes payable $ 9,216 $ 50,366
Current portion of long-term debt 1,330 3,450
Accounts payable and accrued liabilities 748,049 651,310
---------- ----------
Total current liabilities 758,595 705,126
Long-term debt 1,108,711 1,554,504
Deferred income taxes and other long-term
liabilities 509,372 483,730
Minority interests 26,769 24,681
Common shareholders' equity
Common stock 320,128 320,121
Additional paid-in capital 165,712 165,541
Retained earnings 731,051 634,717
Cumulative foreign currency translation
adjustment (35,399) (39,738)
---------- ----------
Total common shareholders' equity 1,181,492 1,080,641
---------- ----------
$3,584,939 $3,848,682
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(in 000s)
<TABLE>
<CAPTION>
Half Year Ended
----------------------
June 17, June 18,
1995 1994
--------- ---------
<S> <C> <C>
Operating activities
Net income $ 102,283 $ 65,402
Adjustments to net income
Depreciation and amortization 70,919 64,018
Equity earnings, net of distributions (921) (1,488)
Net gain on assets sold or held
for disposal (61,655) -
Provision for deferred income taxes 14,549 489
Other 969 (231)
Change in operating assets and liabilities
Receivables - net (12,769) (84,950)
Inventories 23 35,982
Prepaid expenses (14,212) (11,506)
Real estate developments 3,322 (29,581)
Accounts payable and accrued liabilities 111,795 2,986
Other (5,135) (13,179)
--------- ---------
Cash flow from operations 209,168 27,942
Investing activities
Capital additions (62,445) (103,181)
Proceeds from sales of businesses and assets 376,703 3,723
Purchase price of investments and
acquisitions (net of acquired cash) (17,022) (56,968)
Other 735 (621)
--------- ---------
Cash flow from (used by) investing
activities 297,971 (157,047)
Financing activities
Short-term borrowings (repayments) - net (41,661) 13,266
Long-term borrowings (repayments) - net (448,735) 143,163
Cash dividends paid (11,897) (11,895)
Other 178 350
--------- ---------
Cash flow from (used by) financing
activities (502,115) 144,884
--------- ---------
Increase in cash and short-term investments 5,024 15,779
Cash and short-term investments at beginning
of period 46,566 37,497
--------- ---------
Cash and short-term investments at end of period $ 51,590 $ 53,276
========= =========
</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 June
17, 1995, its results of operations for the quarter and half year then
ended, and cash flows for the half year 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 half of 1995, the Company declared approximately $5.9
million of cash dividends on its common stock, representing the regular
second quarterly dividend of 10 cents per share. During the first half of
1994, the Company declared approximately $11.9 million of cash dividends on
its common stock, which represented the regular first and second quarterly
dividends of 10 cents per share.
3. Certain prior year amounts have been reclassified to conform to the 1995
presentation.
4. The Company paid interest of $60 million in the first half of 1995 and $40.3
million for the same period in 1994. Income taxes paid (net of refunds)
totaled $9.9 million and $3.5 million for the first halves of 1995 and 1994,
respectively.
5. On May 19, 1995, the Company completed the sale of its worldwide juice and
juice beverage business, resulting in initial net proceeds of approximately
$233 million and a pretax gain of approximately $145 million. In addition,
during the second quarter of 1995, the Company began to implement its plans
to sell certain of its agricultural properties and other assets which have
generated low returns. The book value of the assets to be sold exceeded the
estimated fair value less costs to sell, resulting in an adjustment of $83.3
million. The resulting net pretax gain of $61.7 million was recorded in the
1995 second quarter.
-7-
<PAGE>
DOLE FOOD COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Operating activities for the first half of 1995 generated approximately $209
million of positive cash flow, an increase of $181 million from $28 million for
the first half of 1994, primarily due to significantly improved net working
capital.
During the first half of 1995, the Company reduced net bank debt through a
combination of higher cash flow from operations and proceeds generated primarily
from the two transactions described below.
During the first quarter of 1995, the Company entered into an agreement with a
syndicate of banks for the sale and leaseback of certain vessels including four
recently constructed refrigerated vessels. This transaction generated net
proceeds to the Company of approximately $133 million. The Company will lease
the vessels for seven years.
In addition, on May 19, 1995, the Company completed the sale of its worldwide
juice and juice beverage business. Net proceeds of approximately $233 million
were based upon a preliminary balance sheet. The Company expects to receive
additional proceeds based upon the final closing balance sheet.
At June 17, 1995, the Company had approximately $675 million of net borrowing
capacity under a $1 billion credit facility which expires in 1999. The Company
also borrows under uncommitted lines of credit at rates offered from time to
time by various banks that may or may not be lenders under the $1 billion credit
facility.
Capital expenditures for the first half of 1995 totaled approximately $62
million, of which $57 million was invested in the Company's food operations for
various business expansions and capital improvements and a final delivery
payment on the refrigerated vessels mentioned above.
RESULTS OF OPERATIONS
- ---------------------
Revenues increased 15% over the prior year, from $1.80 billion for the first
half of 1994 to $2.08 billion for the first half of 1995. Second quarter revenue
grew 17%, from $986 million in 1994 to $1.15 billion in 1995. The Company's
food operations contributed approximately $245 million of higher revenue for the
first half and $151 million for the second quarter, primarily attributable to
growth in existing product lines and temporary market conditions for the fresh
vegetable business resulting from the March 1995 California floods.
-8-
<PAGE>
DOLE FOOD COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
- ---------------------------------
Revenues for the Company's real estate operations totaled $137 million and $111
million for the first halves of 1995 and 1994, respectively, and $73 million and
$59 million for the second quarters of 1995 and 1994, respectively. The
increases were primarily due to higher number of residential unit sales, and for
the first half of 1995, the sale of an apartment building in Bakersfield,
California.
Selling, marketing and administrative expenses increased $22 million for the
first half of 1995 compared to the same period of 1994, and $11 million for the
second quarter of 1995 compared to the second quarter of 1994, primarily due to
business expansions.
Operating income for the Company's food operations, net of corporate general and
administrative expenses, increased to $130.8 million for the first half of 1995
compared to $109.0 million in 1994. For the second quarter of 1995, operating
income from food operations, net of corporate general and administrative
expenses, totaled $76.2 million compared to $58.5 million in 1994. Higher
earnings in the first half and second quarter of 1995 over the prior year were
primarily related to the fresh vegetable business which profited from temporary
market conditions resulting from the March 1995 California floods. The
processed pineapple and the value-added pre-cut salad businesses also posted
improved results in 1995, partially offset by lower results for dried fruit and
nuts. In addition, during the second quarter of 1995, the strengthening Pacific
Rim banana market resulted in higher earnings over the prior year. Overall
results for the Company's food operations were favorably impacted by the
strengthening yen and deutschemark during the first half of 1995.
Operating income for the Company's real estate operations totaled $21.3 million
for the first half of 1995 compared to $26.4 million for the same period of
1994. Second quarter operating income totaled $13.8 million and $14.1 million
for 1995 and 1994, respectively. The decreases in 1995 results were primarily
due to a change in the overall sales mix of the Company's Hawaiian residential
operation and the soft Hawaiian economy.
The Lana'i resorts operations continued to report improved occupancy rates,
resulting in a reduced operating loss for the first half of 1995 of $13.6
million compared to $16.0 million for the same period in 1994. Operating loss
was $7.1 million for the second quarter of 1995 and $8.4 million for the
comparable quarter of 1994.
Interest expense, net of interest income and capitalized interest, increased to
$46.2 million for the first half of 1995 from $32.2 million in 1994, as a result
of higher interest rates and higher average borrowing levels.
-9-
<PAGE>
DOLE FOOD COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
- ---------------------------------
During the second quarter of 1995, the sale of the Company's worldwide juice and
juice beverage business was completed, resulting in a pretax gain of
approximately $145.0 million. Revenues related to this business totaled
approximately $300 million in 1994. In addition, during the second quarter of
1995, the Company began to implement its plans to sell certain of its
agricultural properties and other assets which have generated low returns.
Sales agreements have been entered into with respect to certain assets, and
sales efforts are proceeding with respect to the others. The book value of the
assets to be sold exceeded the estimated fair value less costs to sell,
resulting in an adjustment of $83.3 million in the 1995 second quarter. The gain
on the sale of the beverage business, net of adjustments related to the planned
disposal of assets, resulted in a net pretax gain of $61.7 million and an
increase in the Company's estimated 1995 annualized income tax rate from 23% to
32%. The sale of the juice business and the planned sale of agricultural
properties and other assets are not expected to have a significant impact on the
Company's continuing operating income levels.
-10-
<PAGE>
PART II. OTHER INFORMATION
DOLE FOOD COMPANY, INC.
Item 4. Submission of Matters to a Vote of Security Holders
Dole Food Company, Inc. held its Annual Meeting of Stockholders (the "Meeting")
on May 11, 1995, 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: Elaine L. Chao,
Mike Curb, David A. DeLorenzo, Richard M. Ferry, James F. Gary, Frank J. Hata
and David H. Murdock; (2) to approve the Company's Non-Employee Directors Stock
Option Plan and (3) to elect Arthur Andersen LLP as the Company's independent
public accountants and auditors for the 1995 fiscal year.
Holders of record of the Company's common stock as of March 24, 1995 were
entitled to vote at the Meeting. On March 24, 1995, there were 59,480,608
shares of common stock outstanding and entitled to vote and 53,038,748 of such
shares were represented at the Meeting. Each of the directors received at least
98.7% of the shares cast in favor of his or her election. The shares cast for
each director are as follows: Elaine L. Chao: 52,416,642 shares for and 622,106
shares withheld; Mike Curb: 52,445,853 shares for and 592,895 shares withheld;
David A. DeLorenzo: 52,378,747 shares for and 660,001 shares withheld; Richard
M. Ferry: 52,458,275 shares for and 580,473 shares withheld; James F. Gary:
52,446,560 shares for and 592,188 shares withheld; Frank J. Hata: 52,448,815
shares for and 589,933 shares withheld; and David H. Murdock: 52,362,114 shares
for and 676,634 shares withheld. With respect to the Non-Employee Directors
Stock Option Plan, the shares cast were 49,553,873 shares for, 3,185,625 shares
against, and 299,250 shares in abstention. With respect to the election of
Arthur Andersen LLP, the shares cast were 52,829,003 shares for, 119,468 shares
against, and 90,277 shares in abstention.
Item 5. Other Information
As previously announced, during the second quarter of 1995, the Company
discontinued discussions to sell its California based dried fruit business to
Sun-Diamond Growers of California.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Page
No. Number
------ ------
11 Computations of earnings per common share 12-13
27 Financial data schedule
(b) No reports on Form 8-K were filed for the quarter
ended June 17, 1995.
-11-
<PAGE>
EXHIBIT 11
DOLE FOOD COMPANY, INC.
Computations of Earnings per Common Share
(Unaudited)
(in 000s, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended
--------------------
June 17, June 18,
1995 1994
--------- ---------
<S> <C> <C>
PRIMARY
Net income applicable to common shares........ $78,662 $35,653
======= =======
Average number of common shares outstanding
during the period 59,482 59,468
Add:
Shares issuable upon exercise of stock
options at average prices during the
period..................................... 216 211
------- -------
Total primary shares 59,698 59,679
======= =======
Primary earnings per common share $ 1.32 $ .60
======= =======
FULLY DILUTED
Net income applicable to common shares
and dilutive securities...................... $78,662 $35,653
======= =======
Average number of common shares outstanding
during the period 59,482 59,468
Add:
Shares issuable upon exercise of stock
options at higher of average prices
or end of period prices................... 216 211
------- -------
Total fully diluted shares 59,698 59,679
======= =======
Fully diluted earnings per common share $ 1.32 $ .60
======= =======
</TABLE>
-12-
<PAGE>
EXHIBIT 11
(Continued)
DOLE FOOD COMPANY, INC.
Computations of Earnings per Common Share
(Unaudited)
(in 000s, except per share amounts)
<TABLE>
<CAPTION>
Half Year Ended
--------------------
June 17, June 18,
1995 1994
--------- --------
<S> <C> <C>
PRIMARY
Net income applicable to common shares........ $102,283 $65,402
======== =======
Average number of common shares outstanding
during the period 59,481 59,466
Add:
Shares issuable upon exercise of stock
options at average prices during the
period..................................... 224 238
-------- -------
Total primary shares 59,705 59,704
======== =======
Primary earnings per common share $ 1.71 $ 1.10
======== =======
FULLY DILUTED
Net income applicable to common shares
and dilutive securities...................... $102,283 $65,402
======== =======
Average number of common shares outstanding
during the period 59,481 59,466
Add:
Shares issuable upon exercise of stock
options at higher of average prices
or end of period prices.................... 245 238
-------- -------
Total fully diluted shares 59,726 59,704
======== =======
Fully diluted earnings per common share $ 1.71 $ 1.10
======== =======
</TABLE>
-13-
<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
July 31, 1995 By /s/ MICHAEL S. KARSNER
-------------------------------
Michael S. Karsner
Vice President - Treasurer
and Chief Financial Officer
By /s/ PATRICIA A. MCKAY
-------------------------------
Patricia A. McKay
Vice President - Finance
and Controller
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS <F1>
<FISCAL-YEAR-END> DEC-31-1994<F1>
<PERIOD-START> JAN-01-1995<F1>
<PERIOD-END> JUN-17-1995<F1>
<CASH> 51,590
<SECURITIES> 0
<RECEIVABLES> 410,369<F2>
<ALLOWANCES> 42,542<F3>
<INVENTORY> 511,361
<CURRENT-ASSETS> 1,339,805
<PP&E> 2,318,488
<DEPRECIATION> 633,595
<TOTAL-ASSETS> 3,584,939
<CURRENT-LIABILITIES> 758,595
<BONDS> 1,108,711
<COMMON> 320,128
0
0
<OTHER-SE> 861,364
<TOTAL-LIABILITY-AND-EQUITY> 3,584,939
<SALES> 2,077,349
<TOTAL-REVENUES> 2,077,349
<CGS> 1,722,470
<TOTAL-COSTS> 1,722,470
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,458
<INCOME-PRETAX> 150,383
<INCOME-TAX> 48,100
<INCOME-CONTINUING> 102,283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 102,283
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.71
<FN>
<F1>THE COMPANY'S FISCAL YEAR ENDS ON THE SATURDAY CLOSEST TO DECEMBER 31.
FISCAL YEAR 1994 CONSISTED OF 52 WEEKS AND ENDED ON DECEMBER 31, 1994. ALL
QUARTERS IN 1995 HAVE 12 WEEKS, EXCEPT THE THIRD QUARTER OF 1995 WHICH HAS 16
WEEKS. THE FIRST HALF OF 1995 CONSISTED OF 24 WEEKS AND ENDED ON JUNE 17, 1995.
<F2>INCLUDES TRADE RECEIVABLES ONLY.
<F3>INCLUDES AMOUNTS RELATED TO TRADE RECEIVABLES AND CURRENT NOTES RECEIVABLE.
</FN>
</TABLE>
