<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 14, 1997
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.)
31365 OAK CREST DRIVE
WESTLAKE VILLAGE, CALIFORNIA 91361
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (818) 879-6600
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 12, 1997
- --------------------- -----------------------------------
Common Stock, without 59,965,817
par value
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- --------------------------------------------------------------------------------
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DOLE FOOD COMPANY, INC.
INDEX
-----
Page
Number
------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Income -- quarters and
half years ended June 14, 1997 and June 15, 1996.......... 3
Consolidated Balance Sheets -- June 14, 1997 and
December 28, 1996......................................... 5
Consolidated Statements of Cash Flow -- half years ended
June 14, 1997 and June 15, 1996.......................... 6
Notes to Consolidated Financial Statements............... 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............ 8
PART II. OTHER INFORMATION
ITEM 3. Legal Proceedings....................................... 9
ITEM 4. Submission of Matters to a Vote of Security Holders..... 10
ITEM 6. Exhibits and Reports on Form 8-K........................ 10
Signatures.............................................. 13
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PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in 000s, except per share amounts)
Quarter Ended
- -------------------------------------------------------------------------------
June 14, June 15,
1997 1996
----------- -----------
REVENUE $ 1,107,804 $ 1,041,191
Cost of products sold 916,798 861,599
----------- -----------
Gross margin 191,006 179,592
Selling, marketing and administrative
expenses 90,798 88,423
----------- -----------
Operating income 100,208 91,169
Interest expense (15,065) (16,382)
Interest income 1,244 1,419
Other income (expense) - net (458) 1,374
----------- -----------
Income before income taxes 85,929 77,580
Income taxes (15,500) (14,000)
----------- -----------
NET INCOME $ 70,429 $ 63,580
----------- -----------
----------- -----------
Net income per common share $ 1.17 $ 1.05
----------- -----------
----------- -----------
Average number of common shares outstanding 60,373 60,476
----------- -----------
----------- -----------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in 000s, except per share amounts)
Half Year Ended
- -------------------------------------------------------------------------------
June 14, June 15,
1997 1996
----------- -----------
REVENUE $ 2,072,796 $ 1,855,629
Cost of products sold 1,730,052 1,549,047
----------- -----------
Gross margin 342,744 306,582
Selling, marketing and administrative
expenses 181,737 168,238
----------- -----------
Operating income 161,007 138,344
Interest expense (31,964) (33,384)
Interest income 3,420 3,603
Other income - net 4,709 5,526
----------- -----------
Income before income taxes 137,172 114,089
Income taxes (24,700) (20,500)
----------- -----------
NET INCOME $ 112,472 $ 93,589
----------- -----------
----------- -----------
Net income per common share $ 1.87 $ 1.55
----------- -----------
----------- -----------
Average number of common shares outstanding 60,266 60,393
----------- -----------
----------- -----------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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DOLE FOOD COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(in 000s)
June 14, December 28,
1997 1996
(Unaudited) (Audited)
------------------------------------
CURRENT ASSETS
Cash and short-term investments $ 23,427 $ 34,342
Receivable - net 577,939 518,266
Inventories
Finished products 166,137 169,280
Raw materials and work in progress 118,173 198,306
Growing crop costs 38,185 46,887
Packing materials 18,761 23,213
Operating supplies and other 90,709 88,366
----------- -----------
431,965 526,052
Prepaid expenses 48,817 47,164
----------- -----------
Total current assets 1,082,148 1,125,824
Investments 68,161 72,930
Property, plant and equipment - net 1,015,931 1,024,135
Long-term receivable - net 70,447 69,861
Other assets 202,961 194,057
----------- -----------
$ 2,439,648 $ 2,486,807
----------- -----------
----------- -----------
CURRENT LIABILITIES
Notes payable $ 8,047 $ 20,478
Current portion of long-term debt 1,985 1,497
Accounts payable and accrued liabilities 649,442 639,955
----------- -----------
Total current liabilities 659,474 661,930
Long-term debt 761,635 903,807
Other long-term liabilities 342,832 341,798
Minority interests 35,811 29,712
Common Shareholders' equity
Common stock 320,778 320,476
Additional paid-in capital 170,924 167,645
Retained earnings 223,773 123,280
Cumulative foreign currency translation
adjustment (75,579) (61,841)
----------- -----------
Total common shareholders's equity 639,896 549,560
----------- -----------
$ 2,439,648 $ 2,486,807
----------- -----------
----------- -----------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(in 000s)
Half Year Ended
----------------------
June 14, June 15,
1997 1996
--------- ---------
OPERATING ACTIVITIES
Net income $ 112,472 $ 93,589
Adjustments to net income
Depreciation and amortization 51,593 51,271
Equity earnings, net of distributions (33) (1,914)
Provision for deferred income taxes 12,799 11,908
Gain on sale of assets (4,884) (4,054)
Change in operating assets and liabilities
Receivables, net (64,237) (50,444)
Inventories 94,087 44,606
Prepaid expenses and other assets (24,479) (8,729)
Accounts payable and accrued liabilities 592 15,958
Other 689 (13,092)
--------- ---------
Cash flow provided by operating activities 178,599 139,099
--------- ---------
INVESTING ACTIVITIES
Capital additions (49,351) (34,973)
Proceeds from sales of property, plant & equipment 22,803 9,676
Businesses acquired, net of acquired cash (10,300) (32,578)
Sales of investments, net 9,347 6,485
--------- ---------
Cash flow used in investing activities (27,501) (51,390)
--------- ---------
FINANCING ACTIVITIES
Short-term debt repayments, net (17,431) (13,000)
Long-term debt repayments, net (136,184) (105,664)
Cash dividends paid (11,979) (11,993)
Issuance of common stock 3,581 5,970
--------- ---------
Cash flow used in financing activities (162,013) (124,687)
--------- ---------
Decrease in cash and short-term
investments (10,915) (36,978)
Cash and short-term investments at beginning
of period 34,342 72,151
--------- ---------
Cash and short-term investments at end of period $ 23,427 $ 35,173
--------- ---------
--------- ---------
Interest paid $ 36,822 $ 34,100
Income taxes paid, net of refunds 6,732 (12,100)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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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
14, 1997 and June 15, 1996, and its results of operations for the quarters
and half years then ended and its cash flow for the half years then ended.
Interim results are subject to significant seasonal variations and are not
necessarily indicative of the results of operations for a full year.
For additional information, refer to the notes to the Company's audited
consolidated financial statements for the year ended December 28, 1996.
2. The Company declared and paid dividends on its common stock of approximately
$12.0 million during the first half of 1997 and 1996. The cash dividends
represent the regular quarterly dividend of 10 cents per share.
3. In February 1997, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share",
which is effective for fiscal years ending after December 15, 1997. SFAS
128 replaces disclosure of primary and fully diluted earnings per share
with basic and diluted earnings per share. Application of SFAS 128 would
not have had any effect on the Company's earnings per share for the
quarters or half years ended June 14, 1997 or June 15, 1996.
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DOLE FOOD COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash flow provided by operating activities increased to $178.6 million for
the first half of 1997 from $139.1 million for the comparable period of the
prior year, an increase of $39.5 million. The improvement in cash flow
provided by operating activities is primarily attributable to the strong
operating performance of the Company and the closure of its North America
dried fruit operations.
As of June 14, 1997, the Company had net borrowings outstanding of
approximately $30 million under its $600 million, five year revolving credit
facility.
RESULTS OF OPERATIONS
Net income for the first half of 1997 increased 20% to $112.5 million, $1.87
per share, from $93.6 million, $1.55 per share, for the first half of 1996.
Net income for the second quarter of 1997 increased to $70.4 million, $1.17
per share, from $63.6 million, $1.05 per share, for the second quarter of
1996.
Revenue for the first half of 1997 increased 12% to $2,072.8 million from
$1,855.6 million for the same period in 1996. Revenue for the second quarter
of 1997 was $1,107.8 million, an increase of approximately 6% compared to
revenue for the same quarter of the prior year. Approximately 52% and 67% of
the increase in revenue for the half year and the second quarter,
respectively, is attributable to increased volumes for bananas. The growth
in revenue attributable to increased banana volumes was somewhat mitigated by
slightly lower average pricing and the adverse impact of the stronger dollar
against several major currencies in which the Company transacts sales. Also
contributing to increased revenue for the half year and second quarter was a
larger North America navel and minneola crop which generated high quality
fruit resulting in increased volumes and pricing.
Operating income was $161.0 million for the first half of 1997 compared to
$138.3 million for the first half of 1996, an increase of $22.7 million.
Operating income for the second quarter of 1997 was $100.2 million compared
to operating income of $91.2 million for the second quarter of 1996. Despite
the adverse impact of the stronger dollar on revenues, operating income as a
percentage of revenue has remained constant at 8% and 9% for the first half
and second quarter, respectively, of 1997 and 1996.
Interest expense, net of interest income, decreased 4% for the first half of
1997 and 8% for the second quarter of 1997 compared to the same periods of
the prior year as a result of lower average debt levels. The growth in
earnings and the favorable impact on operating cash flow allowed the Company
to reduce net debt by $143.2 million during the first half of 1997.
Other income, net of other expense, consists primarily of earnings from
equity investments, gains and losses on the sale of property and minority
interest expense. The decrease in other income, net of other expense, for
the first half and second quarter of 1997 is due to an increase in minority
interest expense.
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PART II. OTHER INFORMATION
DOLE FOOD COMPANY, INC.
ITEM 3. LEGAL PROCEEDINGS
In the Company's Form 10-K for the year ended December 28, 1996, the Company
described certain lawsuits that had been filed in Texas against some of the
manufacturers of a formerly widely used agricultural chemical called DBCP,
the Company and several of its competitors. In these lawsuits, a large number
of foreign nationals allege personal injuries caused by contact with DBCP.
The plaintiffs claim that during the 1960's and 1970's they were employees of
Company subsidiaries, competitors and independent local growers. In October
1995, four of the six cases pending in Texas state courts were removed to
Texas federal court and dismissed by the Texas federal court on the grounds
that the plaintiffs' home countries are the more appropriate forums for the
claims. This dismissal involved approximately 75% of the Texas plaintiffs,
many of whom have now filed claims in their home countries of Costa Rica,
Ecuador, Honduras, Nicaragua and the Philippines. Plaintiffs have appealed
these dismissals. The two remaining Texas state court cases were removed to
Texas federal court, one of which has since been dismissed. Such dismissal
has been appealed. Similar DBCP actions were filed in Louisiana state court
in June 1995 by plaintiffs from some of the same foreign countries. The
Louisiana cases were removed to federal court but were remanded in September
1996. In May 1996, additional DBCP actions were filed in Mississippi state
court. These cases have been removed to federal court. As to all such
matters, the Company has denied liability and asserted substantial defenses.
In the opinion of management, after consultation with outside counsel, the
pending lawsuits are not expected to have a material adverse effect on the
Company's financial position or results of operations.
The Company is involved from time to time in various claims and legal actions
incident to its operations, both as plaintiff and defendant. In the opinion
of management, after consultation with outside counsel, none of the claims or
actions to which the Company is a party is expected to have a material
adverse effect on the Company's financial position or results of operations.
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 22, 1997, 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, Zoltan Merszei and David H. Murdock; and (2) to elect Arthur Andersen
LLP as the Company's independent public accountants and auditors for the 1997
fiscal year.
Holders of record of the Company's common stock as of April 2, 1997 were
entitled to vote at the Meeting. On April 2, 1997, there were 59,893,427
shares of common stock outstanding and entitled to vote and 55,423,929 of
such shares 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
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shares cast for each director are as follows: Elaine L. Chao: 55,127,538 for
and 296,391 withheld; Mike Curb: 55,124,818 for and 299,111 withheld; David
A. DeLorenzo: 55,131,088 for and 292,841 withheld; Richard M. Ferry:
55,139,068 for and 284,861 withheld; James F. Gary: 54,754,732 for and
669,197 withheld; Zoltan Merszei: 54,769,143 for and 654,786 withheld; and
David H. Murdock: 55,059,879 for and 364,050 withheld. With respect to the
election of Arthur Andersen LLP, the shares cast were 55,214,588 shares for,
93,918 shares against, and 115,423 shares in abstention.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
Exhibit Page
No. Number
------- ------
11 Computations of earnings per common share 11
27 Financial data schedule
(B) No reports on Form 8-K were filed for the quarter
ended June 14, 1997.
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EXHIBIT 11
DOLE FOOD COMPANY, INC.
COMPUTATIONS OF EARNINGS PER COMMON SHARE
(Unaudited)
(in 000s, except per share amounts)
Quarter Ended
---------------------
June 14, June 15,
1997 1996
-------- --------
PRIMARY
Net income applicable to common shares $ 70,429 $ 63,580
-------- --------
Average number of common shares outstanding
during the period 59,917 60,022
Add:
Shares issuable upon exercise of stock
options at average orices during the
period 456 454
-------- --------
Total primary shares 60,373 60,476
-------- --------
Primary earnings per common share $ 1.17 $ 1.05
-------- --------
-------- --------
FULLY DILUTED
Net income applicable to common shares $ 70,429 $ 63,580
-------- --------
Average number of common shares outstanding
during the period 59,917 60,022
Add:
Shares issuable upon exercise of stock
options at higher of average prices or
end of period prices 586 630
-------- --------
Total fully diluted shares 60,503 60,652
-------- --------
Fully diluted earnings per common share $ 1.16 $ 1.05
-------- --------
-------- --------
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EXHIBIT 11
(CONTINUED)
DOLE FOOD COMPANY, INC.
COMPUTATIONS OF EARNINGS PER COMMON SHARE
(Unaudited)
(in 000s, except per share amounts)
Half Year Ended
---------------------
June 14, June 15,
1997 1996
--------- ---------
PRIMARY
Net income applicable to common shares $ 112,472 $ 93,589
--------- ---------
Average number of common shares outstanding
during the period 59,887 59,956
Add:
Shares issuable upon exercise of stock
options at average prices during the
period 379 437
--------- ---------
Total primary shares 60,266 60,393
--------- ---------
Primary earnings per common share $ 1.87 $ 1.55
--------- ---------
--------- ---------
FULLY DILUTED
Net applicable to common shares $112,472 $ 93,589
--------- ---------
Average number of common shares outstanding
during the period 59,887 59,956
Add:
Shares issuable upon exercise of stock
options at higher of average prices or
end of period prices 586 630
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Total fully diluted shares 60,473 60,586
--------- ---------
Fully diluted earnings per common share $ 1.86 $ 1.54
--------- ---------
--------- ---------
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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 29, 1997 By /s/ HARVEY J. HEIMBUCH
----------------------------
Harvey J. Heimbuch
Vice President - Controller
and Chief Accounting Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998<F1>
<PERIOD-START> DEC-29-1996<F1>
<PERIOD-END> JUN-14-1997<F1>
<CASH> 23,427
<SECURITIES> 0
<RECEIVABLES> 633,355
<ALLOWANCES> 55,416
<INVENTORY> 431,965
<CURRENT-ASSETS> 1,082,148
<PP&E> 1,653,260
<DEPRECIATION> 637,329
<TOTAL-ASSETS> 2,439,648
<CURRENT-LIABILITIES> 659,474
<BONDS> 761,635
0
0
<COMMON> 320,778
<OTHER-SE> 319,118
<TOTAL-LIABILITY-AND-EQUITY> 2,439,648
<SALES> 2,072,796
<TOTAL-REVENUES> 2,072,796
<CGS> 1,730,052
<TOTAL-COSTS> 1,730,052
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,964
<INCOME-PRETAX> 137,172
<INCOME-TAX> 24,700
<INCOME-CONTINUING> 112,472
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,472
<EPS-PRIMARY> 1.87
<EPS-DILUTED> 1.86
<FN>
<F1>THE COMPANY'S FISCAL YEAR ENDS ON THE SATURDAY CLOSEST TO DECEMBER 31. FISCAL
YEAR 1997 CONSISTS OF 52 WEEKS AND ENDS ON JANUARY 3, 1998. ALL QUARTERS IN
1997 HAVE 12 WEEKS, EXCEPT THE THIRD QUARTER OF 1997 WHICH HAS 16 WEEKS.
</FN>
</TABLE>
