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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 20, 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 1-4455
-----------------------------
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 31, 1998
- -------------------------- -----------------------------------
Common Stock, No Par Value 60,365,452
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1
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DOLE FOOD COMPANY, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
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PART I. FINANCIAL INFORMATION
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Income - quarters and half years ended
June 20, 1998 and June 14, 1997................................................. 3
Consolidated Balance Sheets - June 20, 1998 and
January 3, 1998.................................................................. 5
Consolidated Statements of Cash Flow - half years ended
June 20, 1998 and June 14, 1997.................................................. 6
Notes to Consolidated Financial Statements....................................... 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................................... 9
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.............................. 11
ITEM 6. Exhibits and Reports on Form 8-K................................................. 11
Signatures....................................................................... 12
</TABLE>
2
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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)
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------
June 20, June 14,
1998 1997
---------- ----------
<S> <C> <C>
Revenue $1,163,986 $1,107,804
Cost of products sold 955,788 916,798
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Gross margin 208,198 191,006
Selling, marketing and administrative expenses 93,412 90,798
---------- ----------
Operating income 114,786 100,208
Interest income 1,644 1,244
Other income (expense) - net (1,167) (458)
---------- ----------
Earnings before interest and taxes 115,263 100,994
Interest expense (15,168) (15,065)
---------- ----------
Income before income taxes 100,095 85,929
Income taxes (18,000) (15,500)
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Net income $ 82,095 $ 70,429
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---------- ----------
Net income per common share
Basic $ 1.36 $ 1.18
Diluted 1.35 1.17
---------- ----------
---------- ----------
Diluted average number of common shares outstanding 60,894 60,373
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
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DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in 000s, except per share amounts)
<TABLE>
<CAPTION>
Half Year Ended
---------------------------------
June 20, June 14,
1998 1997
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<S> <C> <C>
Revenue $2,175,970 $2,072,796
Cost of products sold 1,828,751 1,730,052
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Gross margin 347,219 342,744
Selling, marketing and administrative expenses 190,726 181,737
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Operating income 156,493 161,007
Interest income 3,331 3,420
Other income (expense) - net (2,100) 4,709
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Earnings before interest and taxes 157,724 169,136
Interest expense (29,868) (31,964)
---------- ----------
Income before income taxes 127,856 137,172
Income taxes (23,000) (24,700)
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Net income $ 104,856 $ 112,472
---------- ----------
---------- ----------
Net income per common share
Basic $ 1.74 $ 1.88
Diluted 1.72 1.87
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Diluted average number of common shares outstanding 60,865 60,266
---------- ----------
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</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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DOLE FOOD COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(in 000s)
<TABLE>
<CAPTION>
June 20, January 3,
1998 1998
(Unaudited) (Audited)
-------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 32,764 $ 31,202
Receivables - net 593,098 534,844
Inventories
Finished products 159,921 149,933
Raw material and work in progress 118,503 142,623
Growing crop costs 39,376 46,207
Packing materials 25,009 24,803
Operating supplies and other 98,485 105,126
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441,294 468,692
Prepaid expenses 52,152 48,438
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Total current assets 1,119,308 1,083,176
Investments 70,524 69,248
Property, plant and equipment - net 1,057,193 1,024,247
Long-term receivables - net 62,723 63,482
Other assets 281,914 223,742
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TOTAL ASSETS $2,591,662 $2,463,895
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CURRENT LIABILITIES
Notes payable $ 9,989 $ 11,290
Current portion of long-term debt 1,406 2,326
Accounts payable and accrued liabilities 690,344 662,823
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Total current liabilities 701,739 676,439
Long-term debt 774,681 754,849
Other long-term liabilities 314,245 328,293
Minority interests 45,156 37,842
Commitments and contingencies
Common shareholders' equity
Common stock 321,011 320,707
Additional paid-in capital 182,609 174,058
Retained earnings 346,212 259,456
Accumulated other comprehensive loss (93,991) (87,749)
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Total common shareholders' equity 755,841 666,472
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TOTAL LIABILITIES AND EQUITY $2,591,662 $2,463,895
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</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
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DOLE FOOD COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(in 000s)
<TABLE>
<CAPTION>
Half Year Ended
-------------------------------
June 20, June 14,
1998 1997
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 104,856 $ 112,472
Adjustments to net income
Depreciation and amortization 51,769 51,593
Provision for deferred income taxes 11,767 12,799
Change in operating assets and liabilities
Receivables - net (52,798) (64,237)
Inventories 28,658 94,087
Prepaid expenses and other assets (12,562) (24,479)
Accounts payable and accrued liabilities 3,527 592
Internal Revenue Service payment related to
prior years' audits (17,145) --
Other (12,380) (4,228)
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Cash flow provided by operating activities 105,692 178,599
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INVESTING ACTIVITIES
Capital additions (40,015) (49,351)
Proceeds from sales of property, plant & equipment 4,019 22,803
Businesses acquired - net of acquired cash (72,925) (10,300)
Sales (purchases) of investments - net (337) 9,347
------------- -------------
Cash flow used in investing activities (109,258) (27,501)
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FINANCING ACTIVITIES
Short-term debt repayments - net (3,338) (17,431)
Long-term debt borrowings (repayments) - net 11,670 (136,184)
Cash dividends paid (12,059) (11,979)
Issuance of common stock 9,349 3,581
Repurchase of common stock (494) --
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Cash flow provided by (used in) financing activities 5,128 (162,013)
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Increase (decrease) in cash and short-term
investments 1,562 (10,915)
Cash and short-term investments at beginning
of period 31,202 34,342
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Cash and short-term investments at end of period $ 32,764 23,427
------------- -------------
------------- -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
6
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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
20, 1998 and January 3, 1998 (audited), its results of operations for the
quarters and half years ended June 20, 1998 and June 14, 1997 and its cash
flow for the half years then ended. For additional information, refer to
the notes to the Company's audited consolidated financial statements for
the year ended January 3, 1998.
Interim results are subject to significant seasonal variations and are
not necessarily indicative of the results of operations for a full
year. The Company's fresh fruit and vegetable operations are
sensitive to a number of factors including weather conditions and
their effect on industry volumes, prices, product quality and costs.
Operations are also sensitive to fluctuations in currency exchange
rates in both sourcing and selling locations. While the Company has
historically followed a policy of not attempting to hedge foreign
currency fluctuations, the Company periodically enters into forward
contracts related to specific foreign currency denominated purchase
commitments. As of June 20, 1998, the Company had contracted to
purchase German marks to facilitate payment for two German-made
refrigerated container vessels at a weighted average exchange rate of
DM1.78 to $1.00 for a total notional value of $87.1 million. The
fixed-rate contracts will be settled during the fourth quarter of 1999,
and as of June 20, 1998, the total notional value approximated fair
value.
Certain prior year amounts have been reclassified to conform with the 1998
presentation.
2. During the first two quarters of 1998, the Company declared dividends on
its common stock of $18.1 million of which $12.1 million were paid. The
dividends declared during the first half of 1998 include regular quarterly
dividends for the first three quarters of 1998. For the same period of
1997, the Company declared and paid dividends of $12.0 million representing
two regular quarterly dividends of 10 cents per share.
3. The Company paid interest of $29.4 million in the first half of 1998 and
$36.8 million for the same period in 1997. The Company paid income taxes
of $28.8 million for the first half of 1998, which included $17.1 million,
related to prior years' audits. The Company paid income taxes (net of
refunds received) of $6.7 million for the first two quarters of 1997.
4. The Company recognized $98.6 million and $98.7 million of comprehensive
income which consisted of net income and unrealized foreign currency
translation losses of $6.2 million and $13.7 million for the half years
ended June 20, 1998 and June 14, 1997, respectively. For the quarters
then ended, comprehensive income was $80.3 million and $68.2 million
comprised of net income and unrealized foreign currency translation losses
of $1.8 million and $2.2 million, respectively.
7
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5. The weighted average number of common shares outstanding before the
dilutive effect of stock options at average prices were 60,359,000 and
59,917,000 for the quarters ended and 60,278,000 and 59,887,000 for the
half years ended June 20, 1998 and June 14, 1997, respectively.
6. During the first half of 1998, the Company acquired and invested in
operations in North America, Latin America and Europe with an aggregate
cash purchase price, net of cash acquired, of $72.9 million. The
acquisitions included the second quarter purchase of the Sunburst Farms,
Inc. and Floramerica, S.A. group of flower companies. Each of the
acquisitions was accounted for as a purchase and, accordingly, the purchase
price was allocated to the net assets acquired. The purchases resulted in
approximately $37 million of goodwill which will be amortized over 30
years. Results of acquired operations included in the Company's results
for the half year ended June 20, 1998 were not significant.
8
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DOLE FOOD COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Revenue for the first half of 1998 increased 5% to $2,176.0 million from
$2,072.8 million for the first half of 1997. Revenue for the second quarter
of 1998 increased 5% to $1,164.0 from $1,107.8 for the same period of 1997.
Revenue increased due to European distribution businesses acquired in the
fourth quarter of 1997 and favorable volume and pricing in the vegetable and
Honduran beverage operations. Revenue for the first half of 1998 and 1997
included $0.2 million and $72.8 million, respectively, related to the
Company's California dried fruit operation which was closed during 1997.
Excluding the California dried fruit operation, revenue increased 9% for the
first half of 1998 as compared to the same period of 1997.
Net income for the first half of 1998 decreased 7% to $104.9 million, or
$1.72 per diluted share, from $112.5 million, or $1.87 per diluted share, for
the first half of 1997. Net income for the second quarter of 1998 increased
17% to $82.1 million, or $1.35 per diluted share, from $70.4 million, or
$1.17 per diluted share for the same period of 1997. The decrease in
earnings for the first half of 1998 as compared with the first half of 1997
was primarily due to weaker pricing in the North American banana market
during the first quarter of 1998 caused by high industry volume. Earnings
for the second quarter of 1998 as compared with the same period of 1997
increased primarily due to strong banana pricing in Europe and Asia due to
decreased industry volumes. In addition, increased vegetable prices in North
America and increased volume and pricing in the Honduran beverage operation
contributed to improved second quarter results.
Selling, marketing and administrative expenses as a percentage of revenue
remained stable at 9% for the half years ended and 8% for the quarters ended
June 20, 1998 and June 14, 1997.
Interest expense decreased 7% for the first half of 1998 but increased 1% for
the second quarter of 1998 compared to the same periods of the prior year as
a result of lower average debt levels during the first quarter of 1998 versus
the first quarter of 1997.
Other income (expense) - net consists primarily of gains and losses on the
sale of property and minority interest expense. In 1997, other income
included a first quarter gain from the sale of an investment.
The Company has assessed the effect of year 2000 impacts on its computer
software and hardware. Remediation has been completed in certain of the
operating units. Normal software version upgrades and hardware replacements
remain on schedule to solve a large part of the remaining issues by the
Company's internal target date of December 1998. Remediation efforts related
to companies acquired during the first half of 1998 are scheduled to be
completed by June 1999. All remaining remediation work continues with a
December 1998 target date. The Company is also in the process of confirming
year 2000 compliance with key vendors, service providers and suppliers of
existing embedded technology. Based on work performed to date, the Company
believes that the total cost to remediate will not be material to its results
of operations, liquidity or capital resources.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS 131). In accordance with SFAS 131,
the Company is currently evaluating the additional business segments to be
reported in its 1998 Annual Report on Form 10-K. Since the statement
requires additional disclosure only, it will have no effect on the financial
condition or results of operations of the Company.
9
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LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flow provided by operating activities decreased to $105.7 million for
the first half of 1998 from $178.6 million for the comparable period of the
prior year. The decrease was primarily due to lower net earnings, a payment
to the Internal Revenue Service related to prior years' audits and the 1997
closure of the Company's California dried fruit operation. The Company is
currently pursuing a refund of the payment to the Internal Revenue Service.
During the first half of 1997, the Company experienced a decrease
in its working capital requirements as a result of the closure of its dried
fruit operation in Fresno, California.
During the first half of 1998, the Company expended $72.9 million of net cash
for business acquisitions. This amount was comprised primarily of the second
quarter acquisition of the Sunburst Farms, Inc. and Floramerica, S.A. group
of flower companies. The acquisitions were primarily funded by cash flow
from operations during the second quarter. The Company is currently
negotiating additional business acquisitions with an aggregate purchase price
of approximately $150 million. If completed, the acquisitions would be
funded by borrowings, as well as operating cash flow, and would be
completed during the second half of 1998.
Capital expenditures of $40.0 million for the first half of 1998 were for the
acquisition and improvement of productive assets and were funded largely by
second quarter operating cash flow.
As of June 20, 1998, the Company had no borrowings outstanding under its $400
million, five year revolving credit facility.
During the first half of 1998, the Company repurchased 10,000 shares at a
cost of $0.5 million.
10
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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 13, 1998, at which the Company's stockholders: (1) elected
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; (2) approved the Company's 1998
Combined Annual and Long-Term Incentive Plan for Executive Officers; (3)
elected Arthur Andersen LLP as the Company's independent public accountants
and auditors for the 1998 fiscal year; and (4) defeated a stockholder
proposal presented by the International Ladies Garment Workers Union Death
Benefit Fund concerning the composition and procedures of the nominating
committee (the "Proposal") (the Company's Board of Directors opposed the
Proposal).
Holders of record of the Company's common stock as of March 31, 1998 were
entitled to vote at the Meeting. On March 31, 1998, there were 60,355,612
shares of common stock outstanding and entitled to vote and 56,262,304 of
such shares were represented at the Meeting. Of the shares cast, each of the
directors received at least 99.5% in favor of his or her election. The
shares cast for each director are as follows: Elaine L. Chao: 55,978,408
for and 283,896 withheld; Mike Curb: 55,973,859 for and 288,445 withheld;
David A. DeLorenzo: 55,984,139 for and 278,165 withheld; Richard M. Ferry:
55,981,159 for and 281,145 withheld; James F. Gary: 55,957,505 for and
304,799 withheld; Zoltan Merszei: 55,965,507 for and 296,797 withheld; and
David H. Murdock: 55,948,855 for and 313,449 withheld. With respect to the
Company's Combined Annual and Long-Term Incentive Plan for Executive
Officers, the shares cast were 54,827,158 for, 1,134,124 shares against and
299,019 shares in abstention. With respect to the election of Arthur
Andersen LLP, the shares cast were 56,138,899 for, 66,788 shares against and
56,617 shares in abstention. With respect to the Proposal, the shares cast
were 11,574,091 for, 40,357,081 shares against, 707,841 shares in abstention
and 3,623,291 shares were not voted.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
<TABLE>
<CAPTION>
Exhibit Page
No. Number
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<S> <C>
10 1998 Combined Annual and Long-Term Incentive Plan for Executive Officers 13
27 Financial data schedule 28
</TABLE>
(b) No reports on Form 8-K were filed for the quarter
ended June 20, 1998.
11
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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
August 4, 1998 By /s/ James A. Dykstra
----------------------
James A. Dykstra
Controller and
Chief Accounting Officer
12
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EXHIBIT 10
DOLE FOOD COMPANY, INC.
1998 COMBINED ANNUAL
AND LONG-TERM INCENTIVE PLAN
FOR EXECUTIVE OFFICERS
13
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
2. DEFINITIONS; RULES OF CONSTRUCTION AND INTERPRETATION. . . . . . . . . .16
2.1 RULES OF CONSTRUCTION.. . . . . . . . . . . . . . . . . . . . . .16
2.2 SECTION 162(m). . . . . . . . . . . . . . . . . . . . . . . . . .16
2.3 ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . . . . . . .16
2.4 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . .17
3. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
4. COVERAGE; ELIGIBLE PERSONS . . . . . . . . . . . . . . . . . . . . . . .22
5. BONUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
5.1 PROVISION FOR BONUS . . . . . . . . . . . . . . . . . . . . . . .23
5.2 SELECTION OF PERFORMANCE TARGET(S), MEASUREMENT
INTERVAL(S), BASE SALARY FACTORS. . . . . . . . . . . . . . . . .23
5.3 MAXIMUM INDIVIDUAL BONUS. . . . . . . . . . . . . . . . . . . . .23
5.4 ADJUSTMENTS FOR MATERIAL CHANGES. . . . . . . . . . . . . . . . .23
5.5 TIME OF PAYMENT; DEFERRED AMOUNTS . . . . . . . . . . . . . . . .24
5.6 ACCELERATION OF AWARD PAYOUT OPPORTUNITIES. . . . . . . . . . . .25
5.7 SHARE PAYOUTS . . . . . . . . . . . . . . . . . . . . . . . . . .25
5.8 NEW PARTICIPANTS. . . . . . . . . . . . . . . . . . . . . . . . .26
5.9 INTRACOMPANY AND POSITION TRANSFERS . . . . . . . . . . . . . . .26
6. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
6.1 ROLE OF THE COMMITTEE . . . . . . . . . . . . . . . . . . . . . .26
6.2 COMMITTEE CERTIFICATION . . . . . . . . . . . . . . . . . . . . .28
6.3 COMMITTEE DISCRETION TO REDUCE BONUSES. . . . . . . . . . . . . .28
6.4 NO AUTHORITY TO INCREASE BONUSES. . . . . . . . . . . . . . . . .28
6.5 FINALITY OF ACTION; EXERCISE OF DISCRETION. . . . . . . . . . . .28
7. STOCKHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . .29
8. AMENDMENT OR TERMINATION . . . . . . . . . . . . . . . . . . . . . . . .29
8.1 POWER TO AMEND. . . . . . . . . . . . . . . . . . . . . . . . . .29
8.2 EFFECT OF PLAN TERMINATION. . . . . . . . . . . . . . . . . . . .29
9. RIGHTS OF PARTICIPANTS AND BENEFICIARIES; NO ASSIGNMENT;
OTHER PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .30
9.1 VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
9.2 LIMITATIONS ON EMPLOYEES' RIGHTS; NO ASSURANCE OF
PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . .30
9.3 ALIENATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .30
9.4 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . .31
9.5 RELIANCE ON EXPERTS . . . . . . . . . . . . . . . . . . . . . . .31
9.6 OPTION TO REFUSE PAYMENTS . . . . . . . . . . . . . . . . . . . .31
9.7 DESIGNATION OF BENEFICIARIES. . . . . . . . . . . . . . . . . . .31
9.8 UNSECURED AND UNFUNDED STATUS OF THE PLAN AND CLAIMS. . . . . . .31
14
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<S> <C>
9.9 RIGHT OF OFFSET . . . . . . . . . . . . . . . . . . . . . . . . .32
9.10 TAX WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . .32
9.11 VALIDITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
9.12 INUREMENT OF RIGHTS AND OBLIGATIONS . . . . . . . . . . . . . . .32
</TABLE>
15
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DOLE FOOD COMPANY, INC.
1998 COMBINED ANNUAL AND LONG-TERM INCENTIVE PLAN
FOR EXECUTIVE OFFICERS
1. PURPOSE
The purpose of the Plan is to promote the success of the Company
by providing to Participants(1) annual and long-term bonus incentives that
qualify as performance-based compensation within the meaning of Section 162(m)
of the Code.
2. DEFINITIONS; RULES OF CONSTRUCTION AND INTERPRETATION
2.1 RULES OF CONSTRUCTION. For all purposes of the Plan and
Award Agreements, unless otherwise expressly provided or the context otherwise
requires,
(a) the terms used in the Plan, and not otherwise defined
have the meaning assigned to them in this Section 2, and the terms include the
plural and the singular,
(b) all references in this Plan to designated "Sections"
and other subdivisions are to the designated Sections and other subdivisions of
the body of this Plan, and
(c) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms.
2.2 SECTION 162(m). It is the intent of the Company that all
payments under the Plan qualify as performance-based compensation under Section
162(m) of the Code and the Plan shall be interpreted consistent with such
intent.
2.3 ACCOUNTING TERMS. Except as otherwise expressly provided or
the context otherwise requires, financial and accounting terms are used as
defined for purposes of, and shall be determined in accordance with, generally
accepted accounting principles, as from time to time in effect, and, if
applicable, as specifically applied and reflected in financial statements of the
Company or the applicable Business Unit, prepared in the ordinary course of
business. Without limiting the generality of the foregoing, such calculations
shall be made after all compensation accruals.
- -------------------------
(1) This and certain other terms used in the Plan are defined in Section 2.
16
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2.4 DEFINED TERMS. For all purposes of the Plan, the following
definitions shall apply:
"ADJUSTED PAYMENT OPPORTUNITY" means the maximum Payment
Opportunity after any reduction by the Committee in accordance with the terms of
the Plan.
"ANNUAL PERFORMANCE CYCLE" means a Performance Cycle lasting not
longer than one Year.
"APPLICABLE FEDERAL RATE" means the applicable federal rate,
compounded quarterly, determined under Section 1274(d) of the Code and Treasury
Regulations issued thereunder for the month in which an early payment is made or
interest on a deferred payment under Section 5.5 is credited under the plan.
"AWARD" means the grant of the opportunity to earn a payment or
bonus under the Plan.
"AWARD AGREEMENT" means a written agreement, if any, entered into
between Dole Food Company, Inc. and a Participant setting forth the terms and
conditions with respect to an Award. The agreement shall specify the Payment
Opportunity associated with the Award, the Business Criteria on which such
Payment Opportunity is based, and the applicable Performance Factors and
Performance Cycle.
"BASE SALARY" means the base salary paid by the Company to the
Participant during the applicable Measurement Interval, exclusive of any
bonuses, commissions or other actual or imputed income from any Company-provided
benefits or perquisites, but prior to any reductions for salary deferred
pursuant to any deferred compensation plan or for contributions to a plan
qualifying under Section 401(k) of the Code or contributions to a cafeteria plan
under Section 125 of the Code.
"BASE SALARY FACTOR" means the multiplier established by the
Committee pursuant to Section 5.2.
"BENEFICIARY" means the person designated by a Participant
pursuant to Section 9.7 of the Plan to receive any benefits hereunder in the
event of the death of the Participant during a Performance Cycle or prior to the
payment of a Bonus for such Performance Cycle.
"BOARD" means the Board of Directors of Dole Food Company, Inc.
"BONUS" means a payment in cash or shares of any portion of a
Payment Opportunity.
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"BUSINESS CRITERIA" include RTSR, EPS, EBT, ROE, ROA, EBT-ROI,
NI-ROI, Net Income, and CR, determined on either a Business Unit or Company
(consolidated) basis.
"BUSINESS UNIT" means a region, subsidiary, division or other
organizational unit of the Company, or segment of its operations for accounting
purposes, which maintains or which is the subject of a separate accounting of
its financial performance.
"CAPITAL CHARGE" means the product of (a) the periodic average of
the Net Investment during the Measurement Interval, and (b) the targeted ratio
of the Company's debt to the sum of its debt and total stockholders' equity, and
(c) the Company's cost of debt, for the applicable Measurement Interval, each of
(b) and (c) determined as of the beginning of the applicable Measurement
Interval.
"CAUSE" means, in the judgment of the Committee, failure to
perform one's duties of employment in a manner acceptable to the Committee or
the person's senior officer (or the Board in the case of the Chief Executive
Officer), conduct injurious to the Company, breach of fiduciary duty, neglect of
duty, willful misconduct, or conviction of any felony.
"CHANGE IN CONTROL" means and shall be deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, but excluding any person described in and satisfying the
conditions of Rule 13d-1(b)(1) thereunder), other than David H. Murdock (or any
affiliate, successor, heir, descendant or related party of or to David H.
Murdock) becomes the "beneficial owner" (as defined generally in Rule 13d-3
under Exchange Act), directly or indirectly, of securities of Dole Food Company,
Inc. representing 20% or more of the combined voting power of its then
outstanding securities; or (b) stockholders of Dole Food Company, Inc. approve
an agreement to merge or consolidate, or otherwise reorganize, with or into one
or more entities which are not Subsidiaries, or the sale of substantially all of
its business and/or assets as an entirety to a person or entity which is not a
Subsidiary, as a result of which less than 50% of the outstanding voting
securities of the surviving or resulting entity or a parent are, or are to be,
owned by former stockholders of the Corporation; or (c) during any period for
two consecutive years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a majority
thereof, except to the extent that the election, or the nomination for election
by stockholders, of each new Board member was approved by a vote of at least
three-fourths of the Board members then still in office who were Board members
at the beginning of such period, with any such new director being deemed for
these purposes to have been an incumbent at the beginning of such period (but in
case of succession, without duplication).
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"COMMITTEE" means the Corporate Compensation and Benefits
Committee of the Board or another committee appointed by the Board to administer
the Plan and comprised of two or more Board members, all of whom shall be
ineligible to participate in the Plan during their service on the Committee and
(to the extent required by applicable law and regulations) shall be "outside
directors" within the meaning of Section 162(m).
"COMPANY" means Dole Food Company, Inc. and its subsidiaries, on a
consolidated basis, unless the context otherwise requires.
"COST REDUCTION" or "CR" for any Measurement Interval means a
reduction in cost of goods sold, selling, marketing, general and administrative
expenses during the Measurement Interval as compared to a prior Measurement
Interval or average of more than one Measurement Interval, expressed as an
absolute dollar amount.
"EARNINGS BEFORE TAXES" or "EBT" for any Measurement Interval
means either the consolidated net income of Dole Food Company, Inc. for such
Measurement Interval before taxes, or, if determined on a Business Unit basis,
its pre-tax earnings for the Measurement Interval, less the Business Unit's
Capital Charge.
"EARNINGS PER SHARE" or "EPS" means per share net income of the
Company, as determined on either a "basic" or "diluted" basis under FAS 128, as
established by the Committee in connection with the grant of the Award.
"EBT-ROI" means EBT for the Measurement Interval divided by the
periodic average of the Net Investment for the Measurement Interval.
"ELIGIBLE PERSON" means an Executive Officer of Dole Food Company,
Inc.
"EXECUTIVE OFFICER" has the meaning set forth in Rule 3b-7 under
the Securities Exchange Act of 1934 and refers to the individuals confirmed to
be within such definition by the Board and/or the Committee.
"FAIR MARKET VALUE" shall mean Fair Market Value (as defined in
the Stock Plan) except that Common Stock (as used in definition of Total
Stockholder Return) shall mean the common stock of Dole Food Company, Inc. or
the applicable member of the Peer Group, as the case may be.
"LONG-TERM PERFORMANCE CYCLE" means a Performance Cycle of at
least two fiscal years or, after 1998, three or more complete fiscal years,
commencing on or after the beginning of the 1998 fiscal year, which Performance
Cycle may be exclusive or may include fiscal years in other Performance Cycles,
all as
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determined by the Committee in connection with the grant of the Award.
"MEASUREMENT INTERVAL" means a period of time within or coincident
to a Performance Cycle with respect to which Performance Target(s) are
established for any one or more of the Business Criteria.
"NET INCOME" means net income for the Measurement Interval, after,
in the case of a Business Unit, a Capital Charge.
"NET INCOME-ROI" or "NI-ROI" means the Net Income for the
Measurement Interval divided by the periodic average of the Net Investment for
the Measurement Interval.
"NET INVESTMENT" means total assets less the sum of (i) cash and
cash equivalents (short-term investments), (ii) investments in consolidated
subsidiaries, (iii) accounts payable and accrued liabilities, and (iv) minority
interests and deferred credits, for the Company or applicable Business Unit.
"PARTICIPANT" means an Eligible Person who has been designated a
Participant by the Committee for the applicable Performance Cycle and granted an
Award in accordance with the terms and subject to the conditions of the Plan.
"PAYMENT OPPORTUNITY" means the amount determined pursuant to any
bonus formula set forth in any Award granted under the Plan.
"PEER GROUP" means the S&P Foods Index, MidCap Foods Index, or a
Committee designated group of not more than 30 nor less than 10 companies as the
Peer Group for the Performance Cycle, which Peer Group shall be designated by
the Committee in connection with the grant of the Award.
"PERFORMANCE CYCLE" means the period of time over which
performance is measured for determining the amount of any Payment Opportunity
from Awards granted under the Plan. Performance Cycles are either Annual or
Long-Term Performance Cycles.
"PERFORMANCE TARGET(S)" means the specific objective goal or goals
(which may be cumulative or alternative) that are timely set in writing by the
Committee for each Participant for the Measurement Interval and/or Performance
Cycle in respect of any one or more of the Business Criteria.
"PERIOD" means the four-week accounting cycle of the Company.
"RELATIVE TOTAL STOCKHOLDER RETURN" or "RTSR" means the
performance of Dole Food Company, Inc. relative to a designated
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Peer Group, based on the sum of the change(s) in the stock price,
dividend(s) and other distributions of each included company paid over the
Measurement Interval.
"RETIREMENT" means retirement from active service as an employee
or officer of the Company on or after (i) both attaining age 65 and completing
10 or more years of Service or (ii) both attaining age 55 and completing 20 or
more years of Service.
"RETURN ON AVERAGE COMMON EQUITY" or "ROE" means consolidated net
income to common stockholders for the Measurement Interval divided by the
periodic average of total common stockholders' equity during the applicable
Measurement Interval.
"RETURN ON AVERAGE ASSETS" or "ROA" means consolidated net income
divided by the periodic average of the total assets of the Company for the
Measurement Interval.
"SERVICE" means full-time employment with the Company, or
part-time employment if approved by the Committee, including a voluntary leave
of absence approved by the Committee.
"SHARES" means shares of Common Stock of Dole Food Company, Inc.
or any securities or property, including rights, into which the same may be
converted by operation of law or otherwise.
"STOCK PLAN" means the Dole Food Company, Inc. 1991 Stock Option
and Award Plan (as amended and restated through July 31, 1997), as the same may
be amended from time to time, or any other stockholder approved stock plan.
"SUBSIDIARY" means any corporation or other entity of which the
Company beneficially owns, either directly or indirectly, a majority or more of
the voting stock or voting power.
"TERMINATION OF SERVICE" means a termination of Service from the
Company for no reason or for any reason, whether voluntary or involuntary,
including death or disability.
"TOTAL STOCKHOLDER RETURN" refers to the compound annual rate of
return over the Measurement Interval for Dole Food Company, Inc. and each other
company in the applicable Peer Group from changes in the trading price of each
company's common stock and any dividends and other distributions paid by the
company on its common stock during the Measurement Interval, calculated by (i)
assuming that one share of each company's common stock is
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purchased on the first day of the Measurement Interval at a price equal to the
Fair Market Value as of the last trading day immediately prior thereto, (ii)
assuming that additional shares (or portions of shares) of such company's common
stock are purchased with any dividends or distributions paid on the initial
share and on shares accumulated through the assumed reinvestment of dividends
and other distributions, with such purchase being made on the applicable
dividend or distribution payment date at a price equal to the Fair Market Value
of such company's common stock on that date, (iii) calculating the aggregate
number of shares of each company's common stock that would be accumulated over
the Measurement Interval, (iv) multiplying this number by the Fair Market Value
of such company's common stock for the last trading day of the applicable
Measurement Interval, and (v) determining the annual compound rate of growth
over the Measurement Interval between the assumed purchase price set forth in
clause (i) and the value resulting from the computation in clause (iv).
"YEAR" or "PLAN YEAR" means the applicable fiscal year of Dole
Food Company, Inc.
3. TERM
Subject to Section 7, the Plan shall be effective as of January 4,
1998 and shall continue, subject to amendments pursuant to Section 8, for
Performance Cycles ending on or before the close of fiscal year 2007, until the
payout of any Awards outstanding, unless earlier terminated by Dole Food
Company, Inc. pursuant to Section 8. All authority of the Company and the
Committee with respect to Awards shall continue after the termination of this
Plan so long as any Award remains outstanding.
4. COVERAGE; ELIGIBLE PERSONS
Awards may be granted only to Eligible Persons. Actual
Participants in the Plan will be determined for each Performance Cycle by the
Committee at the time the Performance Target(s) are set or, in the case of a
person becoming eligible during a Performance Cycle, within 30 days after such
event. An Eligible Person not selected to participate in the Plan for any
Performance Cycle may participate in another incentive plan of Dole Food
Company, Inc. for that Performance Cycle or be selected by the Committee to
participate in the Plan for other Performance Cycles. An Eligible Person may
not participate concurrently in both the Plan and another incentive plan for the
same Performance Cycle with respect to the same Business Criteria, but may
concurrently participate in an Annual and Long-Term Performance Cycle with
respect to the same or different Business Criteria.
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5. BONUS PROVISIONS
5.1 PROVISION FOR BONUS. Each Participant may receive a Bonus
for a Performance Cycle if, and only if, the Performance Target(s) established
by the Committee for such Performance Cycle are attained. The applicable
Performance Cycle, Business Criteria and Performance Target(s) shall be
determined by the Committee consistent with the terms of the Plan and Section
162(m). Notwithstanding the fact that the Performance Target(s) have been
attained, the Company may pay a Bonus of less than the amount determined by the
formula or standard established pursuant to Section 5.2 or may pay no Bonus at
all, unless the Committee otherwise expressly provides by written contract or
other written commitment.
5.2 SELECTION OF PERFORMANCE TARGET(S), MEASUREMENT INTERVAL(S),
BASE SALARY FACTORS. The specific Performance Target(s) with respect to the
Business Criteria and any applicable Measurement Interval(s) shall be
established by the Committee in advance of the deadlines applicable under
Section 162(m) and while the performance relating to the Performance Target(s)
remains substantially uncertain within the meaning of Section 162(m). At the
time the Performance Target(s) are selected for any Performance Cycle, the
Committee shall provide in terms of an objective formula or standard for each
Participant, and for any person who may become a Participant after the
Performance Target(s) are set: (a) the method of computing the specific amount
that will represent the Participant's maximum Payment Opportunity if the
Performance Target(s) are attained, subject to Sections 5.1, 5.3, 6.3, and 2.2,
and (b) the Base Salary Factor(s) to be used in calculating Payment
Opportunities for any Participant.
5.3 MAXIMUM INDIVIDUAL BONUS. Notwithstanding any other
provision in this Plan, no Participant shall receive any Payment Opportunity
under the Plan in excess of
(a) for any Annual Performance Cycle, $1.5 million or, if less, 1.8
times his or her Base Salary; or
(b) for any Long-Term Performance Cycle, $1.7 million times the number
of years in the Performance Cycle or, if less, 6.4 times the Participant's
average annual Base Salary for the Performance Cycle.
Any Payment Opportunity in excess of the foregoing limits shall automatically be
reduced to the extent of the excess. The foregoing limits are subject to
adjustment for acceleration or deferral of payment.
5.4 ADJUSTMENTS FOR MATERIAL CHANGES. The Committee may
provide, in an applicable Award Agreement or by other action taken at or prior
to the time the Performance Targets are
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established, that Performance Target(s) or other features of an Award under the
Plan (a) shall be adjusted to reflect a change in corporate capitalization, a
corporate event (such as a reorganization, combination, separation, or merger)
or a complete or partial corporate liquidation, or (b) shall be calculated
either without regard for or to reflect any change in accounting policies or
practices affecting the Company and/or the Business Criteria or Performance
Target(s) during the applicable Performance Cycle, or (c) shall be adjusted for
any other circumstance or event, or (d) any combination of (a) through (c), but
only to the extent in each case that such adjustment would be consistent with
the requirements of Section 162(m) to qualify as performance-based compensation.
5.5 TIME OF PAYMENT; DEFERRED AMOUNTS. Subject to Section 6.2,
any Bonus or Bonuses Payable under an Award granted by the Committee under this
Plan shall be paid in accordance with the vesting and payment schedule
established by the Committee, or set forth in any applicable Award Agreement, at
the time of the grant of the Award. Any payment shall be in cash or cash
equivalent or in such other form of equal value on the applicable payment date
(including, but not limited to, Shares or Share equivalents as contemplated by
Section 5.7) as the Committee may approve or require, subject to applicable
withholding requirements. Notwithstanding the foregoing, the Committee, in its
sole discretion (but subject to any prior written commitments and to any
conditions consistent with Sections 5.3, 5.6, and 2.2 that it deems
appropriate), may defer the scheduled payout or vesting of any Bonus and/or
provide to Participants the opportunity to elect to defer the payment of any
Bonus under a Company-sponsored, non-qualified, deferred compensation plan as
contemplated by Section 5.7. In the case of any deferral of a Bonus payment to
a date after the date on which the Bonus or installment thereof would otherwise
be payable, the amount of such deferred Bonus payment shall be increased based
on the Applicable Federal Rate over the deferral period or one or more
predetermined actual investments (including Shares) such that the amount payable
at the later date will be based upon actual returns, including any decrease or
increase in the value of the investment(s), unless the alternative deferred
payment is otherwise not subject to the limitations under Section 162(m).
Unless the Committee otherwise provides in an applicable Award Agreement, or by
other action taken prior to or at the time of a grant of an Award, if a
Participant's remaining Adjusted Payment Opportunity under any Award is, as of
the second or any later anniversary of the completion of the applicable
Performance Cycle, $15,000 or less, the entire remaining Adjusted Payment
Opportunity for that Performance Cycle shall vest and become payable on the last
business day on or before the March 15th following such anniversary.
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5.6 ACCELERATION OF AWARD PAYOUT OPPORTUNITIES.
(a) ACCELERATION. Subject to Section 6.2, an Award Agreement or
the Committee, in its sole discretion, may provide for early payment of an Award
if, at least 9 Periods after the commencement of an Annual Performance Cycle and
26 Periods (18 Periods in the case of the two-year Performance Cycle) after the
commencement of a Long Term Performance Cycle, as the case may be, a
Participant's employment terminates for any reason, other than a voluntary
resignation prior to Retirement or a termination for Cause, or there shall occur
an event described in Section 5.6(b) (including a Change in Control), PROVIDED
THAT (i) in the case of death of the Participant or an event described in
Section 5.6(b), the Committee determines that the applicable Performance
Target(s) have been met through the date of such termination on the basis of
achievement of Performance Target(s) relative to the applicable Business
Criteria to the date of such event, or (ii) in the case of any other
termination, the Committee determines that the applicable Performance Target(s)
have been met for the entire applicable Performance Cycle, and (iii) the amount
of the accelerated payment is discounted at the Applicable Federal Rate.
(b) FUNDAMENTAL CORPORATE CHANGES; CHANGE IN CONTROL. Unless the
Committee otherwise provides in an applicable Award Agreement, or by other
action taken prior to the event, in the event of a Change in Control, or upon
the dissolution or liquidation of Dole Food Company, Inc., payment shall be
made, subject to Section 6.2 and the satisfaction of the applicable Performance
Targets determined on the basis of the Performance Cycle-to-date results from
the beginning of the applicable Performance Cycle to the end of the month
preceding the date of such event, on a prorated basis (where applicable) to the
date of such event in the manner contemplated by Section 8.2. The amount of the
prorated or accelerated payment shall be discounted at the Applicable Federal
Rate.
5.7 SHARE PAYOUTS. Any Shares delivered or payable under the
Plan shall be pursuant to a combined Award under this Plan and a Stock Plan or,
subject to applicable legal requirements, with Shares reacquired by the Company
or for its account on or after January 4, 1998. The number of Shares or stock
units (or similar deferred award representing a right to receive Shares) awarded
in lieu of all or any portion of a cash bonus pursuant to one or more
outstanding Awards under the Plan shall be equal to the largest whole number of
Shares which have an aggregate Fair Market Value no greater than the amount of
cash otherwise payable as of the date such cash payment would have been paid.
Any stock units (or similar rights) shall thereafter be subject to adjustments
as contemplated by the applicable Stock Plan. Dividend equivalent rights as
earned may be accrued and payable in additional stock units, cash or Shares or
any combination thereof, in the Committee's discretion, pursuant to
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the terms of the applicable Stock Plan or other authority referred
to above.
5.8 NEW PARTICIPANTS. Subject to Section 2.2 and at the
discretion of the Committee, an Eligible Person may become a Participant in the
Plan at any time after being employed by the Company; provided that, with
respect to a Long-Term Performance Cycle, the second Year has not yet begun at
the time the Eligible Person becomes a Participant. If an Eligible Person
becomes a Participant during a Performance Cycle, the Participant's Base Salary
Factor and Performance Factors shall be the same as those granted for the
Performance Cycle to other Participants at comparable positions with the
Company. The amount of any such person's Bonus or Payment Opportunity shall not
exceed that proportionate amount (based on the applicable period of Service
relative to the Performance Cycle) of the applicable maximum individual bonus
under Section 5.3.
5.9 INTRACOMPANY AND POSITION TRANSFERS. If a Participant
participates in more than one capacity during any Performance Cycle, the product
of his or her Base Salary and Base Salary Factor for purposes of the Plan for
such Performance Cycle or for any applicable Measurement Interval shall be
computed by (a) multiplying (i) the Base Salary Factor (as determined in or
pursuant to Section 5.2 above) for each position by (ii) the Base Salary of the
Participant while in such position and (b) taking the sum of the products of the
calculation. In determining prorated payments for Participants affiliated with
more than one Business Unit (or more than one Business Unit/Company combination)
during a Performance Cycle, performance achievement for each component (whether
Business Unit or Company) shall be measured over the entire Performance Cycle,
while the weighting of each component shall be determined according to each
Participant's Award Agreement, as the same may be amended consistent herewith.
6. ADMINISTRATION
6.1 ROLE OF THE COMMITTEE. The Plan will be administered by the
Committee. Actions of the Committee with respect to the administration of the
Plan will be taken pursuant to a majority vote or the unanimous written consent
of its members. The Committee may delegate ministerial, accounting,
record-keeping and similar functions necessary for the administration of the
Plan to individuals who are officers or employees of the Company. Subject to
the express provisions of the Plan, the Committee has the authority:
(a) to construe, interpret and administer the Plan and any
Award Agreements defining the rights and obligations of the Company and
Participants under the Plan,
(b) to further define the terms used in the Plan,
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(c) to prescribe, amend and rescind rules and regulations
pertaining to the administration of the Plan,
(d) to determine the duration and purposes of leaves of
absence which may be granted to Participants without constituting a Termination
of Service for purposes of the Plan,
(e) to designate Plan Participants,
(f) to establish the size of Awards made to Participants
under the Plan, designate the specific Business Criteria and set the Performance
Target(s) for the Performance Cycles, the duration of the Performance Cycles,
and the weighting of the Business Criteria used to determine any Payment
Opportunity under the Plan,
(g) to determine when Awards will be granted under the
Plan, and the time or times at which and the form and manner in which Bonuses
will be paid (which may include elective or mandatory deferral alternatives),
(h) to validate the level of achievement in terms of goals
or objectives established for the Plan and to collect and interpret financial
results relative to performance measures, targets and objectives,
(i) to make any adjustments contemplated by Section 5.4 to
the extent provided for in any Award Agreement,
(j) to evaluate the extent to which the applicable
Performance Target(s) were achieved and determine, compute and certify the
extent of amounts payable,
(k) to reduce Payment Opportunities based upon objective or
subjective criteria deemed by the Committee to be appropriate and in furtherance
of the compensation policies of the Company,
(l) with respect to determining Relative Total Stockholder
Return, to collect and interpret such reported results of and other information
regarding Peer Group entities and Dole Food Company, Inc. as the Committee may
deem advisable or appropriate, or to utilize such other readily available
information as it may deem advisable or appropriate, with respect to
determinations made hereunder, provided, however, that if a Peer Group member
(other than Dole Food Company, Inc.) has initiated or become the subject of a
material announced merger, takeover or other change in control proposal that in
the opinion of the Committee has or may have a material effect upon the
determination of such member's Total Stockholder Return for any applicable
Performance Cycle, the Committee shall remove such member from the Peer Group,
subject to reinstatement of such member to the Peer Group if such proposed
transaction is not
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consummated or if in the discretion of the Committee any price distortion
created by such announcement has abated; provided further that, in determining
the performance of each relevant entity, the Committee shall make adjustments to
reflect changes in capitalization, material reorganizations, and similar
corporate changes affecting Dole Food Company, Inc. or any Peer Group entity,
(m) subject to any express limitations of the Plan and
Section 2.2, to accelerate a Bonus (after the attainment of the applicable
Performance Target(s)) and to waive restrictive conditions for a Bonus
(including any forfeiture conditions, but not Performance Target(s)), in such
circumstances as the Committee deems appropriate, and
(n) to make all other determinations necessary or advisable
for the administration of the Plan.
6.2 COMMITTEE CERTIFICATION. No payment may be made and no
Participant will be entitled to receive any payment under the Plan, unless the
Committee first certifies, by resolution of the Committee or other appropriate
action, that (a) the payment amount has been accurately determined in accordance
with the provisions of the Plan, (b) the applicable Performance Target(s) have
been met, and (c) any other material terms have been satisfied.
6.3 COMMITTEE DISCRETION TO REDUCE BONUSES. Unless an Award
Agreement expressly provides to the contrary, the Committee in its sole
discretion, exercised at any time prior to the first payment under any award,
may reduce the Payment Opportunities with respect to any one or more
Participants for the applicable Performance Cycle if the Committee determines
that (a) the achievement of the pre-established Performance Target(s) was
influenced by any unusual, extraordinary, non-recurring event or other factor
extraneous to individual performance, or (b) in its judgment, the failure to
meet other corporate objectives in any respect or Period(s) within the
Performance Cycle warrants such reduction, or (c) the Company or the individual
failed to achieve other financial, strategic or personal goals, which may be
objective or subjective, or (d) for any other reason it deems appropriate.
6.4 NO AUTHORITY TO INCREASE BONUSES. Subject to Sections 5.4
and 2.2, the Committee may not increase the maximum Payment Opportunity for any
individual based on the formula or other provisions of the Plan.
6.5 FINALITY OF ACTION; EXERCISE OF DISCRETION. Any decision
made or action taken by the Company or by the Board of Directors of the Company
or by the Committee arising out of or in connection with the creation,
amendment, construction, administration, interpretation and effect of the Plan
shall be
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within the absolute discretion of such entity and shall be conclusive and
binding upon all persons. No member of the Committee or other director,
officer, or agent shall have any liability for actions taken or omitted under
the Plan by the member or any other person. Subject only to compliance with the
express provisions hereof, the Committee may act in its absolute discretion in
all matters related to the Plan. The Committee need not exercise its discretion
identically from Performance Cycle to Performance Cycle or in the same manner
for all Participants in respect of a single Performance Cycle.
7. STOCKHOLDER APPROVAL
The Plan shall be subject to stockholder approval and to
stockholder reaffirmation, to the extent required by Section 162(m).
Stockholder approval at the 1998 annual meeting of stockholders shall be a
condition to the right of a Participant to receive any payment hereunder.
8. AMENDMENT OR TERMINATION
8.1 POWER TO AMEND. The Committee or the Board may from time to
time amend the Plan in any respect or terminate the Plan, in whole or in part,
provided that no such action shall retroactively impair or otherwise adversely
affect in any material respect any rights of any Participant to benefits under
the Plan that have vested in accordance with Section 9.1 prior to the date of
such action.
8.2 EFFECT OF PLAN TERMINATION. If the Committee terminates or
suspends the Plan during a Performance Cycle, the Committee may provide
Participants with a prorated payment for the Performance Cycle. Unless the
Award Agreement provides otherwise, the prorated payment shall be based on the
number of full Periods of the Performance Cycle completed at the effective time
of the Committee's action divided by the number of full Periods in the
Performance Cycle. Performance for determining the amount of such prorated
payments shall be based, in the Committee's discretion, on the entire
Performance Cycle or, if payout is to be accelerated prior to completion of the
Performance Cycle, on the basis of performance through the date of the
Committee's action, as contemplated by Section 5.6, with the Performance Target
levels prorated based on the number of full Periods of the applicable
Measurement Interval completed at the time of the termination of the Plan. If
performance continues to be measured over the original Performance Cycle,
payment of any vested amounts shall be made following completion of the
Performance Cycle, as provided in Section 5.5 and subject to any Service
requirements or deferred vesting provisions set forth in any Award Agreement.
If performance is measured over a shorter period of time, the initial payment of
any amount shall be made within 90 days following the completion of the revised
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performance measurement term, subject to Section 2.2, and shall be discounted at
the Applicable Federal Rate.
With respect to any Payment Opportunities for Performance Cycles
completed prior to the date on which the Committee terminates the Plan, such
Payment Opportunities shall be (subject to any expressly inconsistent provisions
of an applicable Award Agreement) paid in full within 90 days of the end of the
fiscal year in which the Plan is terminated, subject to any Service
requirements, and discounted at the Applicable Federal Rate.
9. RIGHTS OF PARTICIPANTS AND BENEFICIARIES; NO ASSIGNMENT;
OTHER PROVISIONS
9.1 VESTING. No rights hereunder shall vest prior to the
Committee's action under Section 6.2. Unless the Committee or Award
Agreement expressly provides otherwise, no rights hereunder shall vest prior
to the Committee's action under Section 6.3, the completion of the applicable
Service requirements specified in the applicable Award Agreement or this
Plan, and the satisfaction of all other conditions to vesting set forth in
the Award Agreement or this Plan. With respect to any Award not evidenced by
any written agreement that otherwise provides, the Participant must be
employed at the time of payment in order to receive the payment or have any
vested rights in respect of the payment. The Committee may override (i) this
condition to vesting by its express written authorization in such
circumstances as it deems appropriate, on a case-by-case or other basis, and
(ii) other conditions by its express written authorization subject to Section
2.2. Participants shall have no right to proportionate vesting unless
otherwise expressly provided in writing.
9.2 LIMITATIONS ON EMPLOYEES' RIGHTS; NO ASSURANCE OF
PARTICIPATION. Participation in this Plan shall not be construed as
constituting a commitment, guarantee, agreement or understanding of any kind
that the Company shall continue to employ any individual. Status as an Eligible
Person shall not be construed as a commitment that any Award will be made under
the Plan or to Eligible Persons generally.
9.3 ALIENATION. Any and all rights under the Plan are,
expressly declared to be unassignable and non-transferable. No Participant
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, hypothecate or convey in advance of actual
receipt any benefit payable under the Plan, or any part thereof, or any interest
therein. No portion of the amounts payable under the Plan shall, prior to
actual payment, be subject to seizure, attachment, lien or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, nor shall any portion be transferable by
operation of law
30
<PAGE>
in the event of a Participant's or any other person's bankruptcy or insolvency.
Any such transfer in violation of the preceding provisions shall be considered
null and void.
9.4 GOVERNING LAW. This Plan, any Bonuses hereunder, and all
other related matters shall be governed by, and construed in accordance with the
laws of the State of California, except as to matters of federal law.
9.5 RELIANCE ON EXPERTS. In making any determination or in
taking or not taking any action under the Plan, the Committee may obtain and may
rely upon the advice of experts, including management of and professional
advisors to Dole Food Company, Inc.
9.6 OPTION TO REFUSE PAYMENTS. Each Participant shall be
entitled to refuse (by a writing delivered to the Company prior to the receipt
of the payment or benefit) all or any portion of any payments or benefits under
the Plan if the Participant determines that receipt of such payment or benefit
may result in adverse tax consequences to him or her under Section 4999 of the
Internal Revenue Code. The Company shall be totally and permanently relieved of
any obligation to pay any amounts or provide any benefits which a Participant
explicitly so refuses.
9.7 DESIGNATION OF BENEFICIARIES. Each Participant shall have
the right at any time to designate any person or persons as beneficiaries to
whom any benefits provided under the Plan shall be distributed in the event of
the Participant's death prior to distribution of any or all benefits due the
Participant under the Plan. Each beneficiary designation shall be effective
only when filed in writing with the Company during a Participant's lifetime on a
duly completed Beneficiary Designation Form, and in the manner, approved by the
Company. In the absence of a valid designation or a surviving designated
beneficiary, any benefits shall be distributed to the Participant's estate.
9.8 UNSECURED AND UNFUNDED STATUS OF THE PLAN AND CLAIMS. The
Plan is not funded. Participants and their beneficiaries, heirs, successors and
assigns shall have no legal or equitable rights, interests or claims in respect
of any unvested benefits under the Plan, and no rights, interests or claims as
to any vested benefits in any specific funds or other assets or property of the
Company. No asset of the Company shall be held under any trust for the benefit
of Participants, their beneficiaries, heirs, successors or assigns, or held in
any way as collateral security for the fulfillment of the Company's obligations
under the Plan. Any obligations of the Company to any Participant under the
Plan shall be those of a debtor and any rights of any Participant or former
Participant shall be no greater than those of a general unsecured creditor.
31
<PAGE>
9.9 RIGHT OF OFFSET. If a Participant becomes entitled to a
payment under the Plan and if at such time the Participant has outstanding any
debt, obligation or other liability representing an amount owing to the Company,
then the Company, to the maximum extent permitted by law, may offset such amount
against the amount of the payment otherwise due the Participant under the Plan.
9.10 TAX WITHHOLDING. The Company shall withhold from any
payment due under the Plan an amount sufficient to satisfy all and any amounts
required by applicable federal, state and local laws to be withheld with respect
to such payment. The Company shall have no obligation to advise any Participant
of the existence of any tax or the amount which the employer corporation may be
so required to withhold.
9.11 VALIDITY. In the event that any provision of the Plan is
held to be invalid or unenforceable, the same shall not affect, in any way
whatsoever, the validity of any other provision of the Plan.
9.12 INUREMENT OF RIGHTS AND OBLIGATIONS. Any rights and
obligations under the Plan shall inure to the benefit of, and shall be binding
upon Dole Food Company, Inc., its successors and assigns, and upon Participants
and Beneficiaries, respectively.
32
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-02-1999<F1>
<PERIOD-START> JAN-04-1998
<PERIOD-END> JUN-20-1998
<CASH> 32,764
<SECURITIES> 0
<RECEIVABLES> 654,175
<ALLOWANCES> 61,077
<INVENTORY> 441,294
<CURRENT-ASSETS> 1,119,308
<PP&E> 1,735,158
<DEPRECIATION> 677,965
<TOTAL-ASSETS> 2,591,662
<CURRENT-LIABILITIES> 701,739
<BONDS> 774,681
0
0
<COMMON> 321,011
<OTHER-SE> 434,830
<TOTAL-LIABILITY-AND-EQUITY> 2,591,662
<SALES> 2,175,970
<TOTAL-REVENUES> 2,175,970
<CGS> 1,828,751
<TOTAL-COSTS> 1,828,751
<OTHER-EXPENSES> 192,826
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,868
<INCOME-PRETAX> 127,856
<INCOME-TAX> 23,000
<INCOME-CONTINUING> 104,856
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,856
<EPS-PRIMARY> 1.74<F2>
<EPS-DILUTED> 1.72<F3>
<FN>
<F1> THE COMPANY'S FISCAL YEAR ENDS ON THE SATURDAY CLOSEST TO DECEMBER 31.
FISCAL YEAR 1998 ENDS JANUARY 2, 1999 AND INCLUDES 52 WEEKS. ALL QUARTERS IN
1998 HAVE 12 WEEKS, EXCEPT THE THIRD QUARTER WHICH HAS 16 WEEKS.
<F2> IN ACCORDANCE WITH SFAS NO. 128, "EARNINGS PER SHARE", THIS ITEM REFLECTS
BASIC EARNINGS PER SHARE.
<F3> IN ACCORDANCE WITH SFAS NO. 128, "EARNINGS PER SHARE", THIS ITEM REFLECTS
DILUTED EARNINGS PER SHARE.
</FN>
</TABLE>
