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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED JANUARY 3, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM ________________ TO ________________.
COMMISSION FILE NUMBER 1-4455
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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 number)
31365 OAK CREST DRIVE, WESTLAKE VILLAGE, CALIFORNIA 91361
(Address of principal executive offices)
Registrant's telephone number, including area code: (818) 879-6600
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE
---------------------------------------- ON WHICH REGISTERED
---------------------------------
Common Stock, No Par Value New York Stock Exchange
Pacific Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
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Indicate by check mark whether 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. /X/
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 20, 1998 was approximately $2,317,603,107.
The number of shares of Common Stock outstanding as of March 20, 1998 was
60,354,537.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1998 Annual Report to Stockholders for the year
ended January 3, 1998 are incorporated by reference into Parts I, II and IV.
Portions of the registrant's definitive Proxy Statement for its 1998 Annual
Meeting of Stockholders are incorporated by reference into Part III.
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DOLE FOOD COMPANY, INC.
FORM 10-K
FISCAL YEAR ENDED JANUARY 3, 1998
TABLE OF CONTENTS
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ITEM NUMBER
IN FORM 10-K PAGE
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PART I
1. Business.................................................................................. 1
2. Properties................................................................................ 6
3. Legal Proceedings......................................................................... 8
4. Submission of Matters to a Vote of Security Holders; Executive Officers of the
Registrant................................................................................ 9
PART II
5. Market for the Registrant's Common Equity and Related Stockholder Matters................. 11
6. Selected Financial Data................................................................... 11
7. Management's Discussion and Analysis of Financial Condition and Results of Operations... 11
8. Financial Statements and Supplementary Data............................................... 11
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.... 11
PART III
10. Directors and Executive Officers of the Registrant....................................... 12
11. Executive Compensation................................................................... 12
12. Security Ownership of Certain Beneficial Owners and Management........................... 12
13. Certain Relationships and Related Transactions........................................... 12
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................... 12
(a) 1. Index to Financial Statements........................................................ 12
2. Index to Financial Statement Schedules................................................ 12
3. Exhibits.............................................................................. 13
(b) Reports on Form 8-K...................................................................... 14
Signatures............................................................................................ 15
Financial Statements and Financial Statement Schedules................................................ F-1-F-2
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PART I
ITEM 1. BUSINESS
Dole Food Company, Inc. was founded in Hawaii in 1851 and was incorporated
under the laws of Hawaii in 1894. Unless the context otherwise requires, Dole
Food Company, Inc. and its consolidated subsidiaries are referred to herein as
the "Company" and "Dole".
The Company's principal executive offices are located at 31365 Oak Crest
Drive, Westlake Village, California 91361, telephone (818) 879-6600. At January
3, 1998, the Company had approximately 44,000 full-time employees worldwide. The
Company is engaged in food production and distribution. Dole is one of the
largest companies engaged in the worldwide sourcing, growing, processing,
distributing and marketing of high quality, branded fresh produce.
The Company's operations are described below. For detailed financial
information with respect to the Company's business and its operations, see the
Company's Consolidated Financial Statements and the related Notes to
Consolidated Financial Statements, which are included in its 1997 Annual Report
for the fiscal year ended January 3, 1998 (the "Dole Annual Report") and
incorporated by reference in Part II of this report.
GENERAL
Dole is engaged in the worldwide sourcing, growing, processing, distributing
and marketing of high quality, branded fresh produce. Dole provides retail and
institutional customers and other food product companies with high quality
products which are produced and improved through research, agricultural
assistance and advanced harvesting, processing, packing, cooling, shipping and
marketing techniques and which bear the DOLE-Registered Trademark- trademarks.
Dole is one of the world's largest producers of bananas and pineapples. Dole
is also a major marketer of citrus and table grapes worldwide and an industry
leader in iceberg lettuce, celery, cauliflower and broccoli and in fresh-cut
salads and pre-cut vegetables. Dole also processes California almonds.
Dole's products are produced both directly on Company-owned or leased land
and through associated producer and independent grower arrangements pursuant to
which Dole provides varying degrees of farming, harvesting, packing, storing,
shipping, stevedoring and marketing services, as well as financing through
advances to growers of certain products. Fresh fruit and vegetable products,
almonds and processed pineapple products are, for the most part, packed and/or
processed directly by Dole.
Dole utilizes product quality, brand recognition, competitive pricing,
effective customer service and consumer marketing programs to enhance its
position within the highly competitive food industry. Consumer and institutional
recognition of the DOLE-Registered Trademark- trademarks and related brands and
the association of these brands with high quality food products contribute
significantly to Dole's ability to compete in the markets for fresh fruit and
vegetables, packaged foods and dried fruit, nuts and beverages. The Company owns
these trademarks in the United States, Canada and in other countries in which it
conducts business and regards them as important corporate assets with high
recognition and acceptance.
The markets for all of Dole's products are highly competitive. In order to
compete successfully, Dole sources products of high quality and seeks to
distribute them in worldwide markets on a timely basis. Dole's competitors in
the fresh fruit business include a limited number of large international food
companies, as well as a large number of smaller independent food companies,
grower cooperatives and foreign government-sponsored producers which have
intensified competition in recent years. With respect to vegetables, a limited
number of grower-shippers in the United States and Mexico supply a significant
portion of the domestic fresh vegetable market. However, numerous smaller
independent distributors also compete with Dole in the market for fresh
vegetables. With respect to processed pineapple, Dole competes against a limited
number of large U.S. companies, as well as a substantial number of foreign
competitors
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and independent canners. Dole's citrus and dried fruit and nut products compete
in North America primarily against large grower processing and marketing
cooperatives with strong brand recognition.
Dole's earnings from its fresh fruit, fresh vegetable, dried fruit and nut
and beverage operations are sensitive to fluctuations in the volatile market
prices for these products. Excess supplies often cause severe price competition.
Growing conditions in various parts of the world, particularly weather
conditions such as floods, droughts and freezes, and diseases and pests are
primary factors affecting market prices because of their influence on supply and
quality of product. Other factors affecting Dole's operations include the
seasonality of its supplies, the ability to process products during critical
harvest periods, the timing and effects of ripening, the degree of
perishability, the effectiveness of worldwide distribution systems, the terms of
various federal and state marketing orders, total worldwide industry volumes,
the seasonality of consumer demand, foreign currency exchange fluctuations,
foreign importation restrictions and foreign political risks.
PRODUCTS
Dole sources, distributes and markets fresh fruit products, including
bananas, pineapples, table grapes, apples, pears, plums, oranges, grapefruit,
lemons, mangoes, kiwi, tangelos, melons, cherries, strawberries, raspberries and
other deciduous, tropical and citrus fruits.
Dole sources, harvests, cools, distributes and markets more than 20
different types of fresh vegetable products, including iceberg lettuce, red and
green leaf lettuce, romaine lettuce, butter lettuce, celery, cauliflower,
broccoli, carrots, brussels sprouts, spinach, red and green onions, asparagus,
snow peas and artichokes. Dole also markets value-added products such as iceberg
lettuce based salad mixes, specialty lettuce salads, complete salad kits which
include dressing and condiments, blends of specialty lettuces, red cabbage,
peeled mini-carrots, shredded carrots, shredded red cabbage and coleslaw.
Dole sources, processes and markets almonds and markets raisins, prunes and
dates.
Dole's fresh fruit and vegetable products and its consumer dried fruit and
nut products are marketed under the DOLE-Registered Trademark- brand, under
other brand names owned by the Company, and, in some cases, under private
labels.
Dole produces and markets processed food products, including sliced, chunk,
tidbit and crushed pineapple and pineapple juice in cans, as well as tropical
fruit salad and mandarin oranges.
Dole's products are marketed through more than 50 direct selling offices in
North America, approximately 50 in Europe, five in Japan, one each in Hong Kong,
Korea, the Middle East and the Philippines, as well as through independent
brokers.
DOLE NORTH AMERICA
DOLE NORTH AMERICA distributes and markets DOLE-Registered Trademark- fresh
fruits and vegetables, and processed food products, including processed
pineapple, canned pineapple juices and pineapple juice blend beverages, almonds,
raisins, prunes and dates, in North America.
Dole markets bananas and pineapples grown in Latin America, table grapes,
apples and pears grown in the United States and Chile, melons grown in Brazil,
Costa Rica and Honduras and citrus fruit grown in the United States, as well as
other deciduous and tropical fruit grown in the United States, Latin America and
Mexico. Fresh pineapple destined for North America is grown by Dole in Hawaii
and in Honduras. These products are sold primarily to retail chains and
wholesalers, which in turn resell or distribute them to retail food stores.
Vegetables, sold as fresh and included in packaged salads and other
value-added products, marketed by Dole are generally grown by independent
growers in California and Arizona and northern and central
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Mexico. The vegetables are generally field packed and transported to Dole's
central cooling and distribution facilities. The products are sold to customers
in North America and, to a lesser extent, Asia and Western Europe.
Almonds are sourced from independent growers and, to a lesser extent,
produced by Dole North America. They are sold in bulk to cereal, confectionery
and other food processors and to a lesser extent, packaged for the retail
consumer. They are marketed overseas, primarily in Western Europe and Asia, and
domestically. Retail packs of raisins, prunes and dates are processed and packed
through co-production arrangements.
Dole has an agreement with Nestle Frozen, Refrigerated & Ice Cream
Companies, Inc., a subsidiary of Nestle USA, Inc., pursuant to which Dole has
licensed to Nestle its rights to market and manufacture processed products in
key segments of the frozen novelty business in the United States and Canada,
including FRUIT 'N JUICE-Registered Trademark-, and SORBET 'N CREAM-TM- bars
and, in the premium novelty category, FRUIT SORBET. Certain pineapple and
pineapple blend fruit juices are obtained through co-production arrangements
with independent manufacturers. Dole also markets DOLE-Registered Trademark-
canned pineapple juice and pineapple juice blend beverages.
DOLEWHIP-Registered Trademark-, a soft-serve, non-dairy dessert, is manufactured
and marketed by Precision Food under license from Dole. In connection with the
sale of a portion of its juice business to Tropicana Products, Inc. in May of
1995, Dole granted to Tropicana a royalty-free license to use certain
trademarks, including DOLE-Registered Trademark-, in Tropicana's juice business.
DOLE LATIN AMERICA
DOLE LATIN AMERICA sources and transports bananas grown in Colombia, Costa
Rica, Ecuador, Guatemala, Honduras, Nicaragua, Panama and Venezuela for markets
principally in North America, Europe, Russia, the Mediterranean and selected
Asian markets.
Fresh pineapples destined for the North American and Western European
markets are grown by Dole Latin America on plantations in Honduras and sourced
from independent producers in Costa Rica.
Dole sources table grapes, apples, pears and other deciduous fruit grown in
Chile, melons grown in Brazil, Costa Rica and Honduras, citrus fruit grown in
Honduras, and mangoes from Brazil, Costa Rica, Ecuador, Guatemala, Honduras,
Mexico and Peru for markets in North America and Western Europe.
Dole operates a fleet of 8 refrigerated containerships and 32 breakbulk
refrigerated ships, of which 20 are Company-owned or bareboat chartered and the
remainder are time chartered. From time to time, excess capacity may be
chartered to others or may carry commercial cargo for third parties.
Dole conducts other food and beverage operations in Honduras. It owns an
approximately 81% interest in, and operates, a beer and soft drink bottling
operation, a bottle crown plant, a plastic injection molding facility used
primarily for the manufacture of beer and soft drink plastic cases, a sugar mill
and sugar cane plantations, as well as a majority interest in an edible oils
refinery, a laundry soap factory, a palm oil extraction operation and a palm oil
plantation. The soft drink bottling operation, which sells its products
primarily in Honduras, competes against other local bottlers.
DOLE ASIA
DOLE ASIA sources bananas and fresh pineapples grown in the Philippines and
transports them to markets principally in Asia and the Middle East. Pineapples
used for processed products distributed around the world are grown primarily in
the Philippines and Thailand. Dole Asia also sources DOLE-Registered Trademark-
and MOUNTAIN-Registered Trademark- asparagus from the Philippines and
distributes and markets these products in Japan and other Asian countries.
Dole distributes domestic and imported fruits and vegetables, including
asparagus, broccoli, tomatoes, cabbage, radishes, carrots, lettuce, cherry
tomatoes and melons, and pre-cut fruits, vegetables and salads,
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in Japan. Dole owns and operates six distribution centers in Japan through joint
ventures with local distributors.
Snow Dole Co., Ltd., a joint venture of Dole and Snow Brand Milk Products
Co., Ltd. of Japan, processes and distributes frozen desserts, canned pineapple
and other processed foods in Japan. Dole granted to Snow Brand Milk Products a
royalty-free license to use certain trademarks, including
DOLE-Registered Trademark-, in Snow's juice business.
Dole also produces anthuriums and other tropical flowers in the Philippines
for export to Japan.
DOLE EUROPE
DOLE EUROPE is a major importer of bananas and other fresh fruits, dried
fruits, nuts and canned fruits in Europe, the Ivory Coast and the Near East.
Dole operates regional banana ripening facilities in France and Spain. It is
a partner in the largest French banana and pineapple producer and is a minority
partner in a banana export company in Guadeloupe. The Company is a minority
partner with the Jamaican Producer Group (the largest banana producer in
Jamaica) in the Jamaican Producers Fruit Distributors Ltd. in the United
Kingdom. This banana ripening and fruit distribution company distributes fresh
fruits and bananas under the DOLE-Registered Trademark- brand, as well as
Jamaican bananas, fruits and vegetables direct to retail stores in the United
Kingdom.
Dole is the majority partner, with the Livorno Stevedore Company C.I.L.P.,
in a major port discharge and distribution facility in the Italian port of
Livorno. Dole operates three banana ripening facilities and fruit and vegetable
distribution facilities in Italy. Dole operates a major fresh fruit and
vegetable distributor and banana ripener in northern Germany. Dole Europe is a
partner in a Norwegian joint venture which owns and operates a cut-salad plant
which supplies the Norwegian market. Dole owns and operates a banana ripening
and fresh fruit distribution facility near Istanbul, Turkey.
Dole owns and operates Pascual Hermanos, a major Spanish citrus and
vegetable producer and exporter.
Dole owns and operates a European dried fruit and nut business which sources
products from around the world for processing and packaging in France and
distribution in France and to other European markets.
RESEARCH AND DEVELOPMENT
Dole's research and development programs concentrate on improvements in
productivity, food safety and product quality of existing products and the
development of new value-added products, as well as agricultural research and
packaging design. Agricultural research is directed toward improving product
yields and product quality by examining and improving agricultural practices in
all phases of production (such as development of specifically adapted plant
varieties, land preparation, fertilization, cultural practices, pest and disease
control, and post-harvesting, packing, and shipping procedures), and includes
on-site technical services and the implementation and monitoring of recommended
agricultural practices. Research efforts are also directed towards integrated
pest management and biological pest control. Specialized machinery is also
developed for various phases of agricultural production and packaging which
reduces labor, improves productivity and efficiency and increases product
quality. Agricultural research is conducted at field facilities primarily in
California, Hawaii, Latin America and Asia.
WORLDWIDE OPERATIONS
Dole has significant food sourcing and related operations in Chile,
Colombia, Costa Rica, Ecuador, Guatemala, Honduras, the Philippines, Thailand
and the United States. Dole also sources food products in Algeria, Argentina,
Australia, Brazil, Cameroon, Greece, Italy, Ivory Coast, Mexico, New Zealand,
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Nicaragua, Panama, Peru, Spain, Syria, Tunisia, Turkey and Venezuela.
Significant volumes of Dole's fresh fruit and packaged products are marketed in
Canada, Western Europe, Japan and the United States, with lesser volumes
marketed in New Zealand, Hong Kong, South Korea, Russia, Australia and certain
countries in Asia, Eastern Europe, Scandinavia, the Middle East and Central and
South America. Exports of Dole's products to these countries, particularly
China, Japan, Russia, South Korea, Taiwan and the Middle East, are subject to
various restrictions which may be increased or reduced in response to
international political pressures, thus affecting Dole's ability to compete in
these markets. Some of Dole's dried fruit and nut products are marketed to Asia
and Western Europe. The European Union ("EU") banana regulations which impose
quotas and tariffs on bananas remained in effect in 1997 and continue to be in
effect in 1998. The World Trade Organization upheld, in a report during 1997, a
complaint from the United States, Ecuador, Mexico, Honduras and Guatemala, that
the EU had installed a "protectionist and discriminatory" banana trade regime by
favoring imports from former European colonies in Africa and the Caribbean.
Trade negotiations and discussions continue between the EU, the United States
and the individual banana exporting countries. These trade negotiations could
lead to further changes in the regulations governing banana exports to the EU.
The net impact of these changing regulations on Dole's future results of
operations is not determinable at this time.
Dole's foreign operations are subject to risks of expropriation, civil
disturbances, political unrest, increases in taxes and other restrictive
governmental policies, such as import quotas. Loss of one or more of its foreign
operations could have a material adverse effect on Dole's operating results.
Dole attempts to maintain a cordial working relationship in each country where
it operates. Because Dole's operations are a significant factor in the economies
of certain countries, its activities are subject to intense public and
governmental scrutiny, and may be affected by changes in the status of the host
economies, the makeup of the government or even public opinion in a particular
country.
The Company distributes its products in more than 90 countries throughout
the world. Dole's international sales are usually transacted in U.S. dollars and
major European and Asian currencies, while certain costs are incurred in
currencies different from those that are received from the sale of the product.
Results of operations may be affected by fluctuations in currency exchange rates
in both the sourcing and selling locations.
ENVIRONMENTAL AND REGULATORY MATTERS
Dole's agricultural operations are subject to a broad range of evolving
environmental laws and regulations in each country in which it operates. In the
United States, these laws and regulations include the Food Quality Protection
Act of 1996, the Clean Air Act, the Clean Water Act, the Resource Conservation
and Recovery Act, the Federal Insecticide, Fungicide and Rodenticide Act and the
Comprehensive Environmental Response, Compensation and Liability Act.
Compliance with these foreign and domestic laws and related regulations is
an ongoing process which is not currently expected to have a material effect on
Dole's capital expenditures, earnings or competitive position. Environmental
concerns are, however, inherent in most major agricultural operations, including
those conducted by Dole, and there can be no assurance that the cost of
compliance with environmental laws and regulations will not be material.
Moreover, it is possible that future developments, such as increasingly strict
environmental laws and enforcement policies thereunder, and further restrictions
on the use of agricultural chemicals could result in increased compliance costs.
Dole's food operations are also subject to regulations enforced by, among
others, the U.S. Food and Drug Administration and state, local and foreign
equivalents and to inspection by the U.S. Department of Agriculture and other
federal, state, local and foreign environmental and health authorities. The U.S.
Food and Drug Administration enforces statutory standards regarding the branding
and safety of food products, establishes ingredients and manufacturing
procedures for certain foods, establishes standards of identity for foods and
determines the safety of food substances in the United States. Similar functions
are
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performed by state, local and foreign governmental entities with respect to food
products produced or distributed in their respective jurisdictions.
ITEM 2. PROPERTIES
The Company maintains executive offices in Westlake Village, California and
auxiliary executive offices in Los Angeles, California, both of which are leased
from third parties. Dole's various divisions also maintain headquarters offices
in Westlake Village and Bakersfield, California, which are leased from third
parties, and in Orland and Salinas, California and Wenatchee, Washington, which
are owned by the Company. The Company owns its Latin American regional
headquarters building in Costa Rica, as well as offices in Colombia and
Honduras. Dole Europe maintains its European headquarters in Paris, France and
regional offices in Hamburg, Germany, Brussels, Belgium, Milan, Italy and
Valencia, Spain, which are leased from third parties. It owns its offices in
Aguilas and Alemenara, Spain. Dole Latin America maintains regional offices in
Chile and Ecuador which are leased from third parties. Dole Asia maintains
offices in Hong Kong, Manila, the Philippines and Tokyo, Japan, which are leased
from third parties. The inability to renew any of the above office leases by the
Company would not have a material adverse effect on the Company's operating
results. The Company and each of its subsidiaries believe that their property
and equipment are generally well maintained, in good operating condition and
adequate for their present needs.
The following is a description of the Company's significant properties.
DOLE NORTH AMERICA
Dole's Hawaii pineapple and papaya operations for the fresh produce market
are located on the island of Oahu and total approximately 8,000 acres, 6,500 of
which are owned by the Company and the remainder of which are leased.
Dole produces citrus on approximately 10,000 acres in the San Joaquin Valley
of California owned directly or through partially-owned agricultural
partnerships and on substantial additional acreage under management
arrangements, as well as through independent growing arrangements. Dole also
provides care and management services for approximately 10,000 citrus acres in
Florida. Citrus is packed in seven Company-owned packing houses--five in
California and two in Florida.
Domestic table grapes are sourced from approximately 3,500 acres on three
Company-owned vineyards in the San Joaquin Valley. Domestic table grapes are
cooled in two Company-owned facilities in the San Joaquin Valley. Dole produces
wine grapes on approximately 400 acres and stone fruit on approximately 800
acres of Company-owned property in the San Joaquin Valley. The Company owns a
cherry packing and processing facility in Victor, California.
Dole produces apples and pears directly from four Company-owned orchards on
approximately 1,250 productive acres in Wenatchee and Chelan, Washington as well
as through independent growing arrangements. The Company also owns apple and
pear storage, processing and packing facilities in Wenatchee and Chelan.
The Company owns approximately 1,400 acres of farmland in California and
Arizona, and leases approximately 8,000 acres of farmland in California and
another 6,000 acres in Arizona in connection with Dole's vegetable operations.
The majority of this acreage is farmed under joint growing arrangements with
independent growers, while the remainder is farmed by Dole. The Company owns
cooling, packing and shipping facilities in Yuma, Arizona and the following
California cities: Marina, Holtville, Guadalupe, Gonzales and Huron.
Additionally, the Company has partnership interests in facilities in Yuma,
Arizona, Salinas, California and Mexico, and leases facilities in Oxnard,
California. The Company owns and operates state-of-the-art, value-added
processing plants in Yuma, Arizona, Soledad, California and Springfield, Ohio.
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Dole produces almonds from approximately 850 acres and pistachios from
approximately 3,000 acres of orchards in the San Joaquin Valley, owned or leased
by the Company, or by agricultural partnerships in which the Company has an
interest.
The Company owns and operates one almond processing and packing plant and
three almond receiving and storage facilities, all of which are located in the
San Joaquin and Sacramento Valleys.
The phase-out of the Company's Hawaii sugar operations was completed in
1996. The former sugar plantation consists of approximately 12,000 acres
(approximately 6,200 acres of which are owned and the remainder of which are
leased) which are partially used for diversified agricultural crops.
Portions of the Company's fresh fruit and vegetable farm properties are
irrigated by surface water supplied by local government agencies using
facilities financed by federal or state agencies, as well as from underground
sources. Water received through federal facilities is subject to acreage
limitations under the 1982 Reclamation Reform Act. The quantity and quality of
these water supplies varies depending on weather conditions and government
regulations. The Company believes that under normal conditions these water
supplies are adequate for current production needs.
DOLE LATIN AMERICA
Dole produces bananas directly from Company-owned plantations in Costa Rica,
Colombia, Honduras and Venezuela as well as through associated producers or
independent growing arrangements in those countries and in Ecuador, Guatemala,
Panama and Nicaragua. The Company owns approximately 18,420 acres in Honduras,
31,400 acres in Costa Rica, 3,000 acres in Colombia and 350 acres in Venezuela.
Dole owns a 50% interest in a Guatemala banana producer which owns or controls
approximately 9,600 acres in Guatemala.
Dole also grows pineapple on approximately 6,000 acres of owned land in
Honduras, primarily for the fresh produce market, and owns a juice concentrate
plant in Honduras for pineapple and citrus.
Dole produces citrus on approximately 600 acres of Company-owned land and
operates a grapefruit packing house in Honduras.
Dole grows grapes, stone fruit, kiwi and pears on approximately 2,400
Company-owned acres in Chile. Dole owns and operates 11 packing and cold storage
facilities, a corrugated box plant and a wooden grape box plant in Chile.
Dole operates Company-owned corrugated box plants in Chile, Colombia, Costa
Rica, Ecuador and Honduras.
The Company's operations in Honduras include an approximately 81% interest
in a beer and soft drink bottling operation, a bottle crown plant, a plastic
injection molding facility used primarily for the manufacture of beer and soft
drink plastic cases and a sugar mill, as well as a majority interest in an
edible oils refinery, a laundry soap factory, a palm oil extraction operation
and 3,800 acres of palm oil plantation.
Dole operates a fleet of 8 refrigerated containerships and 32 breakbulk
refrigerated ships, of which 20 are Company-owned or bareboat chartered and the
remainder are time chartered. The Company also owns or leases approximately
10,000 refrigerated containers and owns or leases approximately 9,400 chassis
and gensets. From time to time, excess capacity may be chartered to others or
may carry commercial cargo for third parties.
DOLE ASIA
Dole operates a pineapple plantation of approximately 24,000 acres in the
Philippines. Originally covered by a lease agreement between Dole and a
government-owned and controlled corporation, approximately 17,000 acres of the
plantation have been transferred to a cooperative of Dole employees
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that will acquire the land pursuant to agrarian reform law. The remaining
acreage in the Philippines is farmed pursuant to individual farm management
contracts. A cannery, freezer, juice concentrate plant, corrugated box plant and
can manufacturing plant, each owned by Dole, are located at or near the
plantation.
Dole owns and operates a cannery, can plant and juice concentrate plant
located in central Thailand and a second multi-fruit cannery in southern
Thailand. Through a subsidiary in Thailand controlled by Dole, Dole grows
pineapple on approximately 3,900 acres of leased land and purchases additional
supplies of pineapple in Thailand on the open market.
Dole operates six distribution facilities in Japan through joint ventures
with local distributors. Two of the distribution centers are located in Tokyo.
Through independent growing arrangements Dole sources product from over 1,200
Japanese farmers.
Dole also sources bananas through associated producers or independent
growing arrangements in the Philippines. A plastic extruding plant and a box
forming plant, both owned by Dole, are located near the plantations. With joint
venture partners, Dole Asia is developing approximately 7,500 acres of citrus
orchards in southwestern China.
DOLE EUROPE
Dole owns twelve banana ripening and fruit distribution facilities in
France, seven in Spain, three in Italy and one in Germany. The Company has a
minority interest in a French company which owns a majority interest in banana
and pineapple plantations in Cameroon and the Ivory Coast, and has banana
producing interests in the Ivory Coast. Dole owns a minority interest in a
banana ripening and fruit distribution company with five facilities in the
United Kingdom. Dole Europe is the majority owner in a port terminal and
distribution facility in Livorno, Italy. The Company owns a banana ripening and
fruit distribution facility near Istanbul, Turkey.
Dole owns and operates four citrus packing houses and three lettuce packing
houses in Spain. The Company also owns and operates approximately 360 acres of
greenhouses and grows lettuce, tomatoes and citrus fruit on approximately 3,500
acres in Spain. It owns its offices in Aguilas and Alemenara, Spain and leases
offices in Valencia, Spain.
In France, the Company owns a dried fruit and nut processing, packaging and
warehousing facility in Vitrolles, a date processing and packing plant in
Marseille and a prune processing and packaging plant in Agen.
ITEM 3. LEGAL PROCEEDINGS
In the Company's Form 10-Q for the quarter ended October 4, 1997, 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. The two remaining Texas state court cases were
removed to Texas federal court, one of which has since been dismissed. Similar
DBCP actions were filed in Louisiana state court in
8
<PAGE>
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.
Additional DBCP actions were filed in the state courts of Mississippi, in May of
1996 and of Hawaii in October of 1997. 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
There were no matters submitted to a vote of security holders during the
quarter ended January 3, 1998.
EXECUTIVE OFFICERS OF THE REGISTRANT
Below is a list of the names and ages of all executive officers of the
Company as of March 20, 1998 indicating their positions with the Company and
their principal occupations during the past five years. The current terms of the
executive officers will expire at the next organizational meeting of the
Company's Board of Directors or at such time as their successors are elected.
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND SUBSIDIARIES
NAME AND AGE AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ --------- --------------------------------------------------------------
<S> <C> <C>
David H. Murdock.......................... (74) Chairman of the Board, Chief Executive Officer and Director of
the Company since July 1985. Chairman of the Board, Chief
Executive Officer and Director of Castle & Cooke, Inc. since
October 1995. Since June 1982, Chairman of the Board and
Chief Executive Officer of Flexi-Van Leasing, Inc., a
Delaware corporation wholly-owned by Mr. Murdock. Sole owner
and developer of the Sherwood Country Club in Ventura
County, California, and numerous other real estate
developments; also sole stockholder of numerous corporations
engaged in a variety of business ventures and in the
manufacture of textile-related products and industrial and
building products.
David A. DeLorenzo........................ (51) President and Chief Operating Officer of the Company since
March 1996. President of Dole Food Company-International
from September 1993 to March 1996. Executive Vice President
of the Company from July 1990 to March 1996. Director of the
Company since February 1991. President of Dole Fresh Fruit
Company from September 1986 to June 1992.
Gregory L. Costley........................ (44) President of Dole North America Fruit since March 1996.
President of Dole Bakersfield from April 1994 to March 1996.
President of Dole Citrus from February 1992 to April 1994.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND SUBSIDIARIES
NAME AND AGE AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ --------- --------------------------------------------------------------
<S> <C> <C>
Lawrence A. Kern.......................... (50) President of Dole Fresh Vegetables, Inc. since January 1993.
Peter M. Nolan............................ (55) President of Dole Packaged Foods Company since February 1995.
Senior Vice President, Sales and Marketing of Dole Packaged
Foods from August 1994 to February 1995. Senior Vice
President, Sales and Marketing for Dole Fresh Fruit and
Vegetables, North America Division, from October 1992 to
August of 1994.
David A. Cohen............................ (34) Senior Vice President-Acquisitions and Investments of the
Company since October 1996. Director of Mergers and
Acquisitions of the Company from March 1991 to December
1996. Director of Investments of Pacific Holding Company (a
sole proprietorship of Mr. Murdock) since March 1991.
John W. Tate.............................. (47) Vice President and Chief Financial Officer of the Company
since October 1997. Senior Vice President and Chief
Financial Officer of Dole Europe from June 1996 to October
1997. Senior Vice President and Chief Financial Officer of
Dole Fresh Vegetables from November 1994 to June 1996. Vice
President, Finance and Administration of Dole Fresh
Vegetables from January 1993 to November 1994.
Harvey J. Heimbuch........................ (65) Vice President of the Company since December 1996. Chief
Accounting Officer and Controller of the Company from
December 1996 to October 1997. Vice President-Finance of
Dole Packaged Foods Company from May 1988 to December 1996.
George R. Horne........................... (61) Vice President-Human Resources of Dole since February 1986.
Vice President of the Company since October 1982.
Edward A. Lang, III....................... (42) Vice President-Treasurer of the Company since July 1996.
Assistant Treasurer from December 1993 to July 1996. Manager
of International Finance of the Company from June 1989 to
December 1993.
Patrick A. Nielson........................ (47) Vice President-International Legal and Regulatory Affairs of
the Company since October 1995. Vice President and General
Counsel-Food Operations of the Company from May 1994 to
October 1995. General Counsel-Food Operations of the Company
from July 1991 to May 1994.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND SUBSIDIARIES
NAME AND AGE AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ --------- --------------------------------------------------------------
<S> <C> <C>
J. Brett Tibbitts......................... (42) Vice President, Corporate General Counsel and Corporate
Secretary of the Company since October 1995. Vice President
and Corporate General Counsel of the Company from May 1994
to October 1995. General Counsel--Corporate of the Company
from June 1992 to May 1994.
Roberta Wieman............................ (54) Vice President of the Company since February 1995. Executive
Assistant to the Chairman of the Board and Chief Executive
Officer from November 1991 to February 1995. Vice President
and Corporate Secretary of Castle & Cooke, Inc. since April
1996. Secretary of Pacific Holding Company (a sole
proprietorship of Mr. Murdock) since January 1992.
James A. Dykstra.......................... (36) Controller and Chief Accounting Officer of the Company since
October 1997. Chief Financial Officer of Dole Latin America
from October 1995 to October 1997. Controller of Dole Latin
America from August 1990 to October 1995.
</TABLE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of March 20, 1998, there were approximately 12,365 holders of record of
the Company's Common Stock. Additional information required by Item 5 is
contained on pages 33, 36, 41 and 43 of the Dole Annual Report. Such information
is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
There is hereby incorporated by reference the information appearing under
the caption "Results of Operations and Selected Financial Data" on page 41 of
the Dole Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
There is hereby incorporated by reference the information appearing under
the caption "Management's Discussion and Analysis of Results of Operations and
Financial Position" on pages 38, 39 and 40 of the Dole Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
There is hereby incorporated by reference the information appearing on pages
25 through 37 of the Dole Annual Report. See also Item 14 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in the Company's independent public accountants
for the 1997 and 1996 fiscal years nor have there been any disagreements with
the Company's independent public accountants on accounting principles or
practices for financial statement disclosures.
11
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is hereby incorporated by reference the information regarding the
Company's directors to appear under the caption "Election of Directors" in the
Company's definitive proxy statement for its 1998 Annual Meeting of Stockholders
(the "1998 Proxy Statement"). See the list of the Company's executive officers
and related information under "Executive Officers of the Registrant", which is
set forth in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information to appear under
the captions "Remuneration of Directors" and "Compensation of Executive
Officers" in the 1998 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is hereby incorporated by reference the information with respect to
security ownership to appear under the captions "General Information",
"Beneficial Ownership of Certain Stockholders" and "Security Ownership of
Directors and Executive Officers" in the 1998 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information to appear under
the caption "Certain Transactions" in the 1998 Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
The following consolidated financial statements are included in the Dole
Annual Report and are incorporated herein by reference:
<TABLE>
<CAPTION>
ANNUAL
REPORT
PAGES
-----------
<S> <C>
Consolidated Statements of Income--fiscal years ended January 3, 1998, December 28,
1996 and December 30, 1995......................................................... 25
Consolidated Balance Sheets--January 3, 1998 and December 28, 1996................... 26
Consolidated Statements of Cash Flow--fiscal years ended January 3, 1998, December
28, 1996 and December 30, 1995..................................................... 27
Notes to Consolidated Financial Statements........................................... 28-36
Report of Independent Public Accountants............................................. 37
2. Financial Statement Schedules:
<CAPTION>
FORM 10-K
PAGES
-----------
<S> <C>
Independent Public Accountants' Report on Financial Statement Schedule............... F-1
Schedule II--Valuation and Qualifying Accounts....................................... F-2
</TABLE>
All other schedules are omitted because they are not applicable, not
required or the information is included elsewhere in the financial statements or
notes thereto.
12
<PAGE>
3. Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO.
- ---------
<C> <S>
3.1 The Restated Articles of Association of the Company, as amended through July 30, 1991. Incorporated by
reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 1991, File No. 1-4455.
3.2 By-Laws of the Company, as amended through March 25, 1993. Incorporated by reference to Exhibit 3.2 to
the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No. 1-4455.
4.1 Credit Agreement dated as of July 29, 1996 among the Company, The Chase Manhattan Bank, as Administrative
Agent and Lender; Bank of America National Trust & Savings Association, as Syndication Agent and
Lender; Citibank, N.A., as Documentation Agent and Lender; and the financial institutions which are
Lenders thereunder, relating to the Company's $400 million revolving credit facility. Incorporated by
reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-QA for the quarter ended October
5, 1996, File No.1-4455.
4.2 Indenture dated as of April 15, 1993 between the Company and Chemical Trust Company of California,
relating to $300 million of the Company's senior notes. Incorporated by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K, event date May 6, 1993, File No. 1-4455.
4.3 Indenture dated as of July 15, 1993 between the Company and Chemical Trust Company of California,
relating to $400 million of the Company's senior notes. Incorporated by reference to Exhibit 4 to the
Company's Current Report on Form 8-K, event date July 15, 1993, File No. 1-4455.
4.4 The Company agrees to furnish to the Securities and Exchange Commission upon request a copy of each
instrument with respect to issues of long-term debt of the Company and its subsidiaries, the authorized
principal amount of which does not exceed 10% of the consolidated assets of the Company and its
subsidiaries.
Executive Compensation Plans and Arrangements--Exhibits 10.1-10.9:
10.1 The Company's 1991 Stock Option and Award Plan, as amended through July 31, 1997. Incorporated by
reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
October 4, 1997, File No. 1-4455.
10.2 The Company's 1982 Stock Option and Award Plan, as amended through July 31, 1997. Incorporated by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
October 4, 1997, File No. 1-4455.
10.3 Dole Food Company, Inc. Executive Supplementary Retirement Plan (effective January 1, 1989), First
Restatement. Incorporated by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 29, 1990, File No. 1-4455.
10.4 Dole Food Company, Inc. Annual Incentive Plan. Incorporated by reference to Exhibit 10.15 to the
Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No. 1-4455.
10.5 Dole Food Company, Inc. Long-Term Incentive Plan. Incorporated by reference to Exhibit 10.16 to the
Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No. 1-4455.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO.
- ---------
<C> <S>
10.6 Dole Food Company, Inc. Executive Deferred Compensation Plan. Incorporated by reference to Exhibit 10.9
to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994.
10.7 The Company's 1996 Non-Employee Directors Deferred Stock and Cash Compensation Plan, as amended effective
October 1, 1997. Incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended October 4, 1997, File No. 1-4455.
10.8 The Company's Stock Ownership Enhancement Program, as effective July 31, 1997. Incorporated by reference
to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended October 4,
1997, File No. 1-4455.
10.9 The Company's 1995 Non-Employee Directors Stock Option Plan. Incorporated by reference to Exhibit 4.1 to
the Company's Report on Form S-8 filed on June 28, 1995, Registration No. 33-60641.
11 Computations of earnings per common share.
13 Dole Food Company, Inc. 1997 Annual Report for the fiscal year ended January 3, 1997. (This Report is
furnished for information of the Commission and, except for those portions thereof which are expressly
incorporated by reference herein, is not "filed" as a part of this Annual Report on Form 10-K.)
21 Subsidiaries of Dole Food Company, Inc.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedules.
</TABLE>
(b) Reports on Form 8-K:
No current reports on Form 8-K were filed by the Company during the last
quarter of the year ended January 3, 1998.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
<TABLE>
<S> <C> <C>
DOLE FOOD COMPANY, INC.
REGISTRANT
</TABLE>
March 27, 1998
<TABLE>
<S> <C> <C>
By: /s/ DAVID H. MURDOCK
-----------------------------------------
David H. Murdock
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ DAVID H. MURDOCK Chairman of the Board and
- ------------------------------ Chief Executive Officer March 27, 1998
David H. Murdock and Director
/s/ DAVID A. DELORENZO
- ------------------------------ President, Chief Operating March 27, 1998
David A. DeLorenzo Officer and Director
/s/ JOHN W. TATE
- ------------------------------ Chief Financial Officer March 27, 1998
John W. Tate
Controller and Chief
/s/ JAMES A. DYKSTRA Accounting Officer
- ------------------------------ (Principal Accounting March 27, 1998
James A. Dykstra Officer)
/s/ ELAINE L. CHAO
- ------------------------------ Director March 27, 1998
Elaine L. Chao
/s/ MIKE CURB
- ------------------------------ Director March 27, 1998
Mike Curb
/s/ RICHARD M. FERRY
- ------------------------------ Director March 27, 1998
Richard M. Ferry
15
<PAGE>
<TABLE>
<C> <S> <C>
/s/ JAMES F. GARY
- ------------------------------ Director March 27, 1998
James F. Gary
/s/ ZOLTAN MERSZEI
- ------------------------------ Director March 27, 1998
Zoltan Merszei
</TABLE>
16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS PAGE
- ----------- ---------
<C> <S> <C>
3.1 The Restated Articles of Association of the Company, as amended through July 30, 1991.
Incorporated by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 28, 1991, File No. 1-4455..........................................
3.2 By-Laws of the Company, as amended through March 25, 1993. Incorporated by reference to Exhibit
3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994,
File No. 1-4455...............................................................................
4.1 Credit Agreement dated as of July 29, 1996 among the Company, The Chase Manhattan Bank, as
Administrative Agent and Lender; Bank of America National Trust & Savings Association, as
Syndication Agent and Lender; Citibank, N.A., as Documentation Agent and Lender; and the
financial institutions which are Lenders thereunder, relating to the Company's $400 million
revolving credit facility. Incorporated by reference to Exhibit 4.1 to the Company's Quarterly
Report on Form 10-QA for the quarter ended October 5, 1996, File No. 1-4455...................
4.2 Indenture dated as of April 15, 1993 between the Company and Chemical Trust Company of
California, relating to $300 million of the Company's senior notes. Incorporated by reference
to Exhibit 4.1 to the Company's Current Report on Form 8-K, event date May 6, 1993, File No.
1-4455.
4.3 Indenture dated as of July 15, 1993 between the Company and Chemical Trust Company of
California, relating to $400 million of the Company's senior notes. Incorporated by reference
to Exhibit 4 to the Company's Current Report on Form 8-K, event date July 15, 1993, File No.
1-4455........................................................................................
4.4 The Company agrees to furnish to the Securities and Exchange Commission upon request a copy of
each instrument with respect to issues of long-term debt of the Company and its subsidiaries,
the authorized principal amount of which does not exceed 10% of the consolidated assets of the
Company and its subsidiaries..................................................................
Executive Compensation Plans and Arrangements - Exhibits 10.1 - 10.9:
10.1 The Company's 1991 Stock Option and Award Plan, as amended through July 31, 1997. Incorporated
by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 4, 1997, File No. 1-4455................................................
10.2 The Company's 1982 Stock Option and Award Plan, as amended through July 31, 1997. Incorporated
by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 4, 1997, File No. 1-4455................................................
10.3 Dole Food Company, Inc. Executive Supplementary Retirement Plan (effective January 1, 1989),
First Restatement. Incorporated by reference to Exhibit 10(c) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 29, 1990, File No. 1-4455.....................
10.4 Dole Food Company, Inc. Annual Incentive Plan. Incorporated by reference to Exhibit 10.15 to the
Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No.
1-4455........................................................................................
10.5 Dole Food Company, Inc. Long-Term Incentive Plan. Incorporated by reference to Exhibit 10.16 to
the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No.
1-4455........................................................................................
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS PAGE
- ----------- ---------
<C> <S> <C>
10.6 Dole Food Company, Inc. Executive Deferred Compensation Plan. Incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994......................................................................................
10.7 The Company's 1996 Non-Employee Directors Deferred Stock and Cash Compensation Plan, as amended
effective October 1, 1997. Incorporated by reference to Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended October 4, 1997, File No.
1-4455........................................................................................
10.8 The Company's Stock Ownership Enhancement Program, as effective July 31, 1997. Incorporated by
reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 4, 1997, File No. 1-4455................................................
10.9 The Company's 1995 Non-Employee Directors Stock Option Plan. Incorporated by reference to
Exhibit 4.1 to the Company's Report on Form S-8 filed on June 28, 1995, Registration No.
33-60641......................................................................................
11 Computations of earnings per common share.......................................................
13 Dole Food Company, Inc. 1997 Annual Report for the fiscal year ended January 3, 1997. (This
Report is furnished for information of the Commission and, except for those portions thereof
which are expressly incorporated by reference herein, is not "filed" as a part of this Annual
Report on Form 10-K.).........................................................................
21 Subsidiaries of Dole Food Company, Inc..........................................................
23 Consent of Arthur Andersen LLP..................................................................
27 Financial Data Schedules........................................................................
</TABLE>
18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Shareholders and Board of Directors
of Dole Food Company, Inc.;
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Dole Food Company, Inc.'s
annual report to shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 6, 1998. Our audit was made for
the purpose of forming an opinion on those statements taken as a whole. The
schedule listed in the preceding index is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Los Angeles, California
April 2, 1998
<PAGE>
DOLE FOOD COMPANY, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
--------------------------
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER BALANCE AT
OF YEAR EXPENSES ACCOUNTS(B) DEDUCTIONS(A) END OF YEAR
----------- ----------- ------------- ------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year Ended January 3, 1998
Allowance for doubtful accounts
Trade receivables $ 40,766 $ 4,932 -- $ 7,829 $ 37,869
Notes and other current receivables 20,988 4,994 -- 3,752 22,230
Long-term receivables 13,474 10,951 3,300 3,269 24,456
Year Ended December 28, 1996
Allowance for doubtful accounts
Trade receivables $ 32,329 $ 18,271 -- $ 9,834 $ 40,766
Notes and other current receivables 14,665 8,992 -- 2,669 20,988
Long-term receivables 10,399 5,311 -- 2,236 13,474
Year Ended December 30, 1995
Allowance for doubtful accounts
Trade receivables $ 25,034 $ 11,120 -- $ 3,825 $ 32,329
Notes and other current receivables 10,034 5,588 -- 957 14,665
Long-term receivables 13,895 2,584 -- 6,080 10,399
</TABLE>
Note:
(A) Write-off of uncollectible amounts.
(B) Net reserve established in connection with asset purchase.
<PAGE>
EXHIBIT 11
DOLE FOOD COMPANY, INC.
Computations of Earnings per Common Share
(in 000s, except per share amounts)
<TABLE>
<CAPTION>
For the year Ended
----------------------------------------
January 3, December 28, December 30,
1998 1996 1995
----------- ------------ ------------
<S> <C> <C> <C>
BASIC
Income from continuing operations
applicable to common shares $ 160,164 $ 89,031 $ 119,824
Loss from discontinued operations
(net of income taxes) applicable
to common shares - - (96,493)
--------- --------- ---------
Net income applicable to common shares $ 160,164 $ 89,031 $ 23,331
--------- --------- ---------
--------- --------- ---------
Weighted average number of common shares 59,959 60,027 59,651
outstanding during the period
Basic earnings (loss) per common share:
Continuing operations $ 2.67 $ 1.48 $ 2.01
Discontinued operations - - (1.62)
--------- --------- ---------
Net income $ 2.67 $ 1.48 $ 0.39
--------- --------- ---------
--------- --------- ---------
DILUTED
Income from continuing operations
applicable to common shares $ 160,164 $ 89,031 $ 119,824
Loss from discontinued operations
(net of income taxes) applicable
to common shares - - (96,493)
--------- --------- ---------
Net income applicable to common shares $ 160,164 $ 89,031 $ 23,331
--------- --------- ---------
--------- --------- ---------
Weighted average number of common shares
outstanding during the period 59,959 60,027 59,651
Add:
Dilutive effect of stock options at
average prices during the period 477 421 127
--------- --------- ---------
Total diluted shares 60,436 60,448 59,778
--------- --------- ---------
--------- --------- ---------
Diluted earnings (loss) per common share
Continuing operations $ 2.65 $ 1.47 $ 2.00
Discontinued operations - - (1.61)
--------- --------- ---------
Net income $ 2.65 $ 1.47 $ 0.39
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $4,336,120 $3,840,303 $3,803,846
Cost of products sold 3,692,277 3,256,345 3,217,869
- -------------------------------------------------------------------------------------------------------------------
Gross margin 643,843 583,958 585,977
Selling, marketing and administrative expenses 399,800 369,675 392,694
Restructuring charge - 50,000 -
- -------------------------------------------------------------------------------------------------------------------
Operating income 244,043 164,283 193,283
Interest income 7,776 8,412 7,501
Net gain on assets sold or held for disposal - - 61,655
Other income (expense) - net 8,034 4,535 (5,429)
- -------------------------------------------------------------------------------------------------------------------
Earnings before interest and taxes 259,853 177,230 257,010
Interest expense (64,589) (68,699) (81,186)
- -------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 195,264 108,531 175,824
Income taxes (35,100) (19,500) (56,000)
- -------------------------------------------------------------------------------------------------------------------
Income from continuing operations 160,164 89,031 119,824
Loss from discontinued operations, net of income taxes - - (96,493)
- -------------------------------------------------------------------------------------------------------------------
Net income $ 160,164 $ 89,031 $ 23,331
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Earnings per common share
Basic - continuing operations $ 2.67 $ 1.48 $ 2.01
Diluted - continuing operations 2.65 1.47 2.00
- -------------------------------------------------------------------------------------------------------------------
Basic - net income (after discontinued operations) $ 0.39
Diluted - net income (after discontinued operations) 0.39
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DOLE FOOD COMPANY, INC. 25
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and short-term investments $ 31,202 $ 34,342
Receivables - net 534,844 518,266
Inventories 468,692 526,052
Prepaid expenses 48,438 47,164
- -----------------------------------------------------------------------------------------------
Total current assets 1,083,176 1,125,824
Investments 69,248 72,930
Property, plant and equipment - net 1,024,247 1,024,135
Long-term receivables - net 63,482 69,861
Other assets 223,742 194,057
- -----------------------------------------------------------------------------------------------
Total assets $2,463,895 $2,486,807
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Current liabilities
Notes payable $ 11,290 $ 20,478
Current portion of long-term debt 2,326 1,497
Accounts payable 230,143 185,747
Accrued liabilities 432,680 454,208
- -----------------------------------------------------------------------------------------------
Total current liabilities 676,439 661,930
Long-term debt 754,849 903,807
Deferred income taxes and other long-term liabilities 328,293 341,798
Minority interests 37,842 29,712
Commitments and contingencies
Common shareholders' equity 666,472 549,560
- -----------------------------------------------------------------------------------------------
Total liabilities and equity $2,463,895 $2,486,807
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
26 DOLE FOOD COMPANY, INC.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Income from continuing operations $ 160,164 $ 89,031 $ 119,824
Adjustments to continuing operations
Depreciation and amortization 112,081 111,073 113,325
Equity earnings net of distributions 373 (2,875) (6,533)
Net gain on assets sold or held for disposal - - (61,655)
Provision for deferred income taxes 11,575 (1,741) 30,429
Restructuring charge - 50,000 -
Other (23,005) (8,203) 41
Change in operating assets and liabilities,
net of effects from acquisitions
Receivables - net (10,438) (89,176) 53,142
Inventories 72,066 27,222 (57,588)
Prepaid expenses and other assets (1,167) (8,846) (18,800)
Accounts payable and accrued liabilities (7,487) (34,270) 30,842
Other (23,126) (37,262) 31,592
- -------------------------------------------------------------------------------------------------------------------
Cash flow provided by operating activities
of continuing operations 291,036 94,953 234,619
Cash flow used in operating activities of
discontinued operations - - (11,467)
- -------------------------------------------------------------------------------------------------------------------
Cash flow provided by operating activities 291,036 94,953 223,152
Investing activities
Proceeds from sales of businesses and assets 39,200 58,417 432,746
Capital additions (129,171) (109,686) (90,276)
Purchases of investments and acquisitions,
net of cash acquired (40,010) (58,775) (35,251)
Other (500) 438 998
- -------------------------------------------------------------------------------------------------------------------
Cash flow provided by (used in) investing
activities of continuing operations (130,481) (109,606) 308,217
Cash flow used in investing activities
of discontinued operations - - (15,144)
- -------------------------------------------------------------------------------------------------------------------
Cash flow provided by (used in) investing activities (130,481) (109,606) 293,073
Financing activities
Short-term borrowings 28,414 19,694 29,348
Repayments of short-term debt (40,887) (20,449) (62,944)
Long-term borrowings 35,232 168,060 12,384
Repayments of long-term debt (169,110) (163,799) (675,098)
Proceeds from distribution of real estate
and resorts business - - 235,186
Cash dividends paid (23,988) (24,020) (23,861)
Issuance of common stock 6,644 11,232 5,101
Repurchase of common stock - (13,874) -
- -------------------------------------------------------------------------------------------------------------------
Cash flow used in financing activities
of continuing operations (163,695) (23,156) (479,884)
Cash flow used in financing activities
of discontinued operations - - (9,352)
- -------------------------------------------------------------------------------------------------------------------
Cash flow used in financing activities (163,695) (23,156) (489,236)
Increase (decrease) in cash and short-term investments (3,140) (37,809) 26,989
Cash and short-term investments at beginning of year 34,342 72,151 45,162
- -------------------------------------------------------------------------------------------------------------------
Cash and short-term investments at end of year $ 31,202 $ 34,342 $ 72,151
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DOLE FOOD COMPANY, INC. 27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
Dole Food Company, Inc. and its consolidated subsidiaries ("the Company")
are engaged in the worldwide sourcing, processing, distributing and
marketing of high quality, branded food products including fresh fruits and
vegetables. Operations are conducted throughout North America, Latin
America, Europe (including eastern European countries), and Asia (primarily
in Japan and the Philippines). The Company is also engaged in beverage
operations in Honduras.
The Company's principal products are produced on both Company-owned and
leased land and are also acquired through associated producer and
independent grower arrangements. The Company's products are
primarily packed and processed by the Company and are sold to retail and
institutional customers and other food product companies.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of all significant majority-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
ANNUAL CLOSING DATE - The Company's fiscal year ends on the Saturday
closest to December 31. Fiscal year 1997 ended January 3, 1998 and included
53 weeks, while fiscal years 1996 and 1995 contained 52 weeks.
CASH AND SHORT-TERM INVESTMENTS - Cash and short-term investments include
cash on hand and time deposits with maturities of three months or less.
INVENTORIES - Inventories are valued at the lower of cost or market. Cost
is determined principally on a first-in, first-out basis. Specific
identification and average cost methods are also used for certain packing
materials and operating supplies.
RECURRING AGRICULTURAL COSTS - The costs of growing bananas and pineapples
are charged to operations as incurred. Growing costs related to other crops
are recognized when the crops are harvested and sold.
INVESTMENTS - Investments in affiliates and joint ventures with ownership
of 20% to 50% are generally recorded on the equity method. Other
investments are generally accounted for using the cost method.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at
cost, less accumulated depreciation. Depreciation is computed principally
by the straight-line method over the estimated useful lives of the assets.
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill and other intangible
assets, generally representing the excess of the cost over the net asset
value of acquired businesses, are stated at cost and are amortized,
principally on a straight-line basis, over the estimated future periods to
be benefited (not exceeding 40 years). The Company periodically reviews the
recoverability of these assets based on analyses of undiscounted expected
future cash flows.
FOREIGN EXCHANGE - For subsidiaries in which the functional currency is the
United States dollar, net foreign exchange transaction gains or losses are
included in determining net income. These resulted in net losses of $5.0
million, $2.1 million, and $2.4 million for 1997, 1996 and 1995,
respectively. Net foreign exchange gains or losses resulting from the
translation of assets and liabilities of foreign subsidiaries whose local
currency is the functional currency are accumulated as a separate component
of common shareholders' equity.
INCOME TAXES - Deferred income taxes are recognized for the tax
consequences of temporary differences by applying enacted statutory tax
rates to the differences between financial statement carrying amounts and
the tax bases of assets and liabilities. The income taxes which would be
due upon the distribution of foreign subsidiary earnings have not been
provided where the undistributed earnings are considered permanently
invested.
EARNINGS PER COMMON SHARE - In accordance with Statement of Financial
Accounting Standards No. 128, basic earnings per common share are
calculated using the weighted average number of common shares outstanding
during the period without consideration of the dilutive effect of stock
options. The basic weighted average number of common shares outstanding was
60.0 million, 60.0 million and 59.7 million for 1997, 1996 and 1995,
respectively. Diluted earnings per common share are calculated using the
weighted average number of common shares outstanding during the period
after consideration of the dilutive effect of stock options. The diluted
weighted average number of common shares and equivalents outstanding was
60.4 million, 60.4 million and 59.8 million for 1997, 1996 and 1995,
respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The historical carrying amount is a
reasonable estimate of fair value for short-term financial instruments.
Fair values for long-term financial instruments not readily marketable were
estimated based upon discounted future cash flows at prevailing market
interest rates. Based on these assumptions, management believes the fair
market values of the Company's financial instruments, other than certain
debt instruments (see Note 7), are not materially different from their
recorded amounts as of January 3, 1998.
STOCK BASED COMPENSATION - Statement of Financial Accounting Standards No.
123 ("SFAS 123") defines a fair value method of accounting for employee
stock
28 DOLE FOOD COMPANY, INC.
<PAGE>
compensation plans but allows for the continuation of the intrinsic
value method of accounting to measure compensation cost prescribed by
Accounting Principles Board Opinion No. 25 ("APB 25"). In accordance with
SFAS 123, the Company has elected to continue utilizing the accounting
method prescribed by APB 25 and has adopted the disclosure requirements of
SFAS 123 (see Note 9).
USE OF ESTIMATES - The preparation of financial statements requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
RECLASSIFICATIONS - Certain prior year amounts have been reclassified to
conform with the 1997 presentation.
NOTE 3 - ACQUISITIONS AND DISPOSITIONS
During 1997 and 1996, the Company acquired and invested in production and
distribution operations in Europe, Latin America and Asia. Each of the
acquisitions was accounted for as a purchase and, accordingly, the purchase
price was allocated to the net assets acquired based upon their estimated
fair values as of the date of acquisition. The fair values of assets and
investments acquired, and liabilities assumed were approximately $79
million and $39 million in 1997 and approximately $106 million and $48
million in 1996. Results of acquired operations were not significant in
1997 or 1996.
In 1996, the Company implemented a formal plan to close its dried fruit
facility located in Fresno, California which had suffered continued losses.
During the fourth quarter of 1996, a restructuring charge of $50.0 million
was recorded related to the closure of this facility. The principal
component of the charge was a provision for asset write-downs of $38.5
million. The closure of this facility was essentially completed in the
second quarter of 1997. During 1997, $30.0 million for asset write-downs,
$2.2 million for contract terminations and $2.6 million for severance
payments were charged against this provision. The remaining balance relates
primarily to write-downs of assets still held for disposal. In total, 466
employees were terminated as a result of the closure of this facility.
During 1995, the Company completed the sale of its juice business,
resulting in net proceeds of approximately $270 million and a pretax gain
of approximately $145 million. In addition, during 1995 the Company began
to implement its plan to sell certain of its agricultural properties and
other assets which had 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 above dispositions resulted in a net
pretax gain of $61.7 million.
NOTE 4 - DISCONTINUED OPERATIONS
On December 28, 1995, the Company completed the separation of its real
estate and resorts business [Castle & Cooke, Inc. ("Castle")] from its food
business in a nontaxable distribution to its shareholders. Under
the plan of distribution, each Company shareholder of record on December
20, 1995 received a dividend of one share of Castle common stock for every
three shares of the Company's common stock. Approximately $1.0 billion of
net assets were transferred to Castle, and in partial consideration thereof
the Company received cash proceeds of approximately $235 million and a
$10 million note receivable from Castle which bears interest at the rate of
7% per annum and is due December 8, 2000. As a result, the Company's common
shareholders' equity was reduced by approximately $582 million (see Note
10).
In connection with the distribution, the operating results of the real
estate and resorts business have been accounted for as a discontinued
operation. Revenues from discontinued operations for 1995 were
approximately $349 million. Basic losses per common share from discontinued
operations were $1.62 and diluted losses per common share from discontinued
operations were $1.61, in 1995. The 1995 loss from discontinued operations
includes an allocation of the Company's overall interest costs (based on
the cash proceeds and the interest bearing note received by the Company at
distribution) of $7.3 million after tax.
During the third quarter of 1995, the Company reviewed certain of its real
estate and resort properties to determine whether expected future cash
flows (undiscounted and without interest charges) from each property would
result in the recovery of the carrying amount of such property. Certain
adverse developments in 1995 affecting the Lana'i resort and certain other
properties caused management to substantially lower its estimates of future
cash flow and led to a determination that the properties were impaired in
accordance with generally accepted accounting principles and accordingly,
an impairment loss of $103.8 million after tax was recorded as part of
discontinued operations in the accompanying 1995 statement of income.
NOTE 5 - CURRENT ASSETS AND LIABILITIES
Short-term investments of $1.8 million and $7.5 million as of January 3,
1998 and December 28, 1996, respectively, consisted principally of time
deposits.
DOLE FOOD COMPANY, INC. 29
<PAGE>
Outstanding checks which are funded as presented for payment totaled
$22.1 million and $48.8 million as of January 3, 1998 and December 28,
1996, respectively, and were included in accounts payable.
Details of certain current assets were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996
---------------------------------------------------------------------
<S> <C> <C>
Receivables
Trade $434,781 $428,186
Notes and other 142,820 138,577
Affiliated operations 17,342 13,257
---------------------------------------------------------------------
594,943 580,020
Allowance for doubtful accounts (60,099) (61,754)
---------------------------------------------------------------------
$534,844 $518,266
---------------------------------------------------------------------
---------------------------------------------------------------------
Inventories
Finished products $149,933 $169,280
Raw material and work in progress 142,623 198,306
Growing crop costs 46,207 46,887
Packing materials 24,803 23,213
Operating supplies and other 105,126 88,366
---------------------------------------------------------------------
$468,692 $526,052
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
Accrued liabilities as of January 3, 1998 and December 28, 1996 included
approximately $86 million and $101 million, respectively, of amounts due to
growers.
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
Major classes of property, plant and equipment were
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996
---------------------------------------------------------------------
<S> <C> <C>
Land and land improvements $ 444,686 $ 391,561
Buildings and improvements 264,494 277,984
Machinery and equipment 864,431 910,785
Construction in progress 84,954 54,728
---------------------------------------------------------------------
1,658,565 1,635,058
Accumulated depreciation (634,318) (610,923)
---------------------------------------------------------------------
$1,024,247 $1,024,135
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
Depreciation expense for 1997, 1996 and 1995 totaled $101.9 million, $102.5
million and $106.2 million, respectively.
NOTE 7 - DEBT
Notes payable consisted primarily of short-term borrowings required to fund
certain foreign operations and totaled $11.3 million with a weighted
average interest rate of 19.3% as of January 3, 1998 and $20.5 million with
a weighted average interest rate of 15.7% as of December 28, 1996.
Long-term debt consisted of:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996
---------------------------------------------------------------------
<S> <C> <C>
Unsecured debt
Notes payable to banks at an
average interest rate of 6.2%
(5.9% - 1996) $ 14,600 $172,300
6.75% notes due 2000 225,000 225,000
7% notes due 2003 300,000 300,000
7.875% debentures due 2013 175,000 175,000
Various other notes due 1998-
2014 at an average interest rate
of 7.8% (5.2% - 1996) 36,102 23,808
Secured debt
Mortgages, contracts and notes due
1998-2012, at an average interest
rate of 9.2% (9.7% - 1996) 8,525 11,594
Unamortized debt discount and
issue costs (2,052) (2,398)
---------------------------------------------------------------------
757,175 905,304
Current maturities (2,326) (1,497)
---------------------------------------------------------------------
$754,849 $903,807
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
The Company estimates the fair value of its fixed interest rate unsecured
debt based on current quoted market prices. The estimated fair value of
unsecured noncallable notes (face value $700 million) was approximately
$716 million at January 3,1998. At December 28, 1996, the estimated fair
value approximated book value.
In July 1996, the Company replaced its existing $1 billion, 5-year
revolving credit facility with a $600 million, 5-year revolving credit
facility (the "Facility"). In July 1997, the Company extended the Facility
to 2002 and in November 1997, reduced it to $400 million. At the Company's
option, borrowings under the Facility bear interest at a certain percentage
over the agent's prime rate or the London Interbank Offered Rate ("LIBOR").
Provisions under the Facility require the Company to comply with certain
financial covenants which include a maximum permitted ratio of consolidated
debt to net worth and a minimum required fixed charge coverage ratio. At
January 3, 1998, there were no borrowings outstanding under the Facility.
Net borrowings outstanding under the Facility at December 28, 1996 totaled
$90.0 million. The Company may also borrow under uncommitted lines of
credit at rates offered from time to time by various banks that may not be
lenders under the Facility. Net borrowings outstanding under the
uncommitted lines of credit totaled $14.6 million and $82.3 million at
January 3, 1998 and December 28, 1996, respectively.
Sinking fund requirements and maturities with respect to long-term debt as
of January 3, 1998 were as follows (in millions): 1998 - $2.3; 1999 -
$10.4; 2000 - $229.8; 2001 - $4.7; 2002 - $19.4; and thereafter $490.5.
30 DOLE FOOD COMPANY, INC.
<PAGE>
Interest payments totaled $66.2 million, $68.4 million and $86.4 million,
during 1997, 1996 and 1995, respectively.
NOTE 8 - EMPLOYEE BENEFIT PLANS
The Company has qualified and non-qualified defined benefit pension plans
covering certain full-time employees. Benefits under these plans are
generally based on each employee's eligible compensation and years of
service except for certain hourly plans which are based on negotiated
benefits.
For U.S. plans, the Company's policy is to fund the net periodic pension
cost plus a 15-year amortization of the unfunded liability. The plans
covering international employees are generally not funded.
The status of the defined benefit pension plans was as follows:
<TABLE>
<CAPTION>
U.S. PLANS ( IN THOUSANDS) 1997 1996
---------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
accumulated benefit obligation
Vested $249,843 $231,999
Non-vested 2,196 3,480
---------------------------------------------------------------------
$252,039 $235,479
---------------------------------------------------------------------
Actuarial present value of
projected benefit obligation $276,767 $248,676
Plan assets at fair value, primarily
stocks and bonds 281,944 250,154
---------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation 5,177 1,478
Unrecognized net transition asset (650) (774)
Unrecognized prior service cost 2,099 2,078
Unrecognized net gain (2,967) (4,969)
Additional minimum liability (1,704) (720)
---------------------------------------------------------------------
Prepaid (accrued) pension cost $ 1,955 $ (2,907)
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL PLANS (IN THOUSANDS) 1997 1996
---------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
accumulated benefit obligation
Vested $ 10,113 $ 9,099
Non-vested 3,105 5,036
---------------------------------------------------------------------
$ 13,218 $ 14,135
---------------------------------------------------------------------
Actuarial present value of
projected benefit obligation $ 30,535 $ 30,776
Plan assets at fair value, primarily
stocks and bonds 1,737 2,473
---------------------------------------------------------------------
Projected benefit obligation in
excess of plan assets (28,798) (28,303)
Unrecognized net transition obligation 1,677 2,892
Unrecognized prior service cost 3,815 4,619
Unrecognized net loss 2,588 108
Additional minimum liability (140) (583)
---------------------------------------------------------------------
Accrued pension cost $(20,858) $(21,267)
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
For U.S. plans, the projected benefit obligation was determined using
assumed discount rates of 7.25% in 1997 and 7.75% in 1996 and assumed rates
of increase in future compensation levels of 4.5% in 1997 and 1996. The
expected long-term rate of return on assets was 9.25% in 1997 and 9.0% in
1996. For international plans, the projected benefit obligation was
determined using assumed discount rates of 7.25% to 20.0% in 1997 and 7.75%
to 20.0% in 1996 and assumed rates of increase in future compensation
levels of 4.5% to 17.5% in 1997 and 1996. The expected long-term rate of
return on assets for international plans was 9.25% to 20.0% in 1997 and
9.0% to 20.0% in 1996.
Pension expense for the U.S. and international plans consisted of the
following components:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996 1995
------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits
earned during the year $ 5,911 $ 9,143 $ 8,114
Interest cost on projected
benefit obligation 22,055 21,968 21,270
Actual return on
plan assets (46,282) (32,823) (46,944)
Net amortization
and deferral 25,817 13,885 28,337
------------------------------------------------------------------------
Net periodic pension cost $ 7,501 $ 12,173 $ 10,777
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
The Company recognized net curtailment losses of $1.3 million in 1996 for
the domestic plans and $2.4 million in 1997 and $3.6 million in 1995 for
the international plans. These losses were due to additional benefit
payments resulting from reductions in workforce.
The Company offers two 401(k) plans generally covering all full-time U.S.
employees. Eligible employees may defer a percentage of their annual
compensation up to a maximum allowable amount under federal income tax law
to supplement their retirement income. These plans provide for Company
contributions based on a certain percentage of each participant's
contribution. Total Company contributions to these plans in 1997, 1996 and
1995 were $3.2 million, $3.8 million and $4.4 million, respectively.
The Company is also a party to various industry-wide collective bargaining
agreements which provide pension benefits. Total contributions to these
plans plus direct payments to pensioners in 1997, 1996 and 1995 were $0.8,
$1.2 million and $0.8 million, respectively.
In addition to providing pension benefits, the Company provides certain
health care and life insurance benefits for eligible retired employees.
Certain employees may become eligible for such benefits if they fulfill
established requirements upon reaching retirement age.
DOLE FOOD COMPANY, INC. 31
<PAGE>
The status of the postretirement benefit plans was
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996
---------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement
benefit obligation (APBO)
Retirees $63,353 $62,991
Fully eligible actives 4,943 5,746
Other actives 3,211 4,439
---------------------------------------------------------------------
71,507 73,176
Unrecognized prior service cost 1,740 2,080
Unrecognized net gain 15,968 13,034
---------------------------------------------------------------------
Accrued postretirement
benefit liability $89,215 $88,290
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
Postretirement benefit expense included the following components:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996 1995
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits
earned during the year $ 212 $ 237 $ 449
Interest cost on APBO 5,423 5,482 7,258
Net amortization and
deferral (333) (481) (342)
Curtailment gain (600) (577) -
------------------------------------------------------------------------------------
Net periodic
postretirement
benefit cost $4,702 $4,661 $7,365
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
</TABLE>
An annual rate of increase in the per capita cost of covered health care
benefits of 9.0% for 1998 decreasing to 5.0% in 2006 and thereafter was
assumed in determining the APBO for the U.S. and international plans in
1997, and 9.5% for 1997 decreasing to 5.0% in 2006 and thereafter was
assumed in determining the APBO for the U.S. and international plans in
1996. Increasing the assumed health care cost trend rate by one percentage
point in each year would have resulted in an increase in the Company's APBO
as of January 3, 1998 of $8.7 million and the aggregate of the service and
interest cost components of postretirement benefit expense for 1997 of $0.7
million. The weighted average discount rate used in determining the APBO
was 7.25% for the U.S. and international plans in 1997 and 7.75% for the
U.S. and international plans in 1996. The plans are not funded.
NOTE 9 - STOCK OPTIONS AND AWARDS
Under the 1991 and 1982 Stock Option and Award Plans ("the Option Plans"),
the Company can grant incentive stock options, non-qualified stock options,
stock appreciation rights, restricted stock awards and performance share
awards to officers and key employees of the Company. Stock options vest
over time or based on stock price appreciation and may be exercised for
up to 10 years from the date of grant, as determined by the committee of
the Company's Board of Directors administering the Option Plans. No stock
appreciation rights, restricted stock awards or performance share awards
were outstanding at January 3, 1998.
Under the 1995 Non-Employee Directors Stock Option Plan (the "Directors
Plan"), each active non-employee director receives a grant of 1,500
non-qualified stock options (the "Options") on February 15th (or the first
trading day thereafter) of each year. The Options vest over three years and
expire 10 years after the date of the grant or upon early termination as
defined by the plan agreement.
Changes in outstanding stock options were as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
---------------------------------------------------------------------
<S> <C> <C>
Outstanding, December 31, 1994 2,055,764 $29.43
Granted 563,000 27.21
Exercised (371,989) 13.73
Canceled (294,513) 31.30
Adjustment for distribution of real
estate and resorts business 8,158
---------------------------------------------------------------------
Outstanding, December 30, 1995 1,960,420 $29.23
Granted 711,000 38.52
Exercised (373,952) 30.04
Canceled (103,661) 33.39
---------------------------------------------------------------------
Outstanding, December 28, 1996 2,193,807 $31.91
Granted 449,630 38.65
Exercised (249,365) 28.36
Canceled (25,288) 36.78
---------------------------------------------------------------------
Outstanding, January 3, 1998 2,368,784 $33.51
---------------------------------------------------------------------
Exercisable, January 3, 1998 1,284,866 $29.78
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
The number and exercise price of all options outstanding were adjusted to
reflect the impact of the distribution of the real estate and resorts
business in December 1995 (see Note 4).
Of the 2,368,784 options outstanding at January 3, 1998, 750,140 have
exercise prices between $17.50 and $27.07 with a weighted-average exercise
price of $26.05 and a weighted-average remaining term of 6 years (697,135
exercisable at a weighted-average exercise price of $26.09), 539,933 have
exercise prices
32 DOLE FOOD COMPANY, INC.
<PAGE>
between $30.92 and $36.99 with a weighted-average exercise price of $33.75
and a weighted-average remaining term of 4 years (539,933 exercisable at a
weighted-average exercise price of $33.75), and 1,078,711 have exercise
prices between $38.50 and $44.25 with a weighted-average exercise price of
$38.58 and a weighted-average remaining term of 9 years (47,798 exercisable
at a weighted-average exercise price of $38.60).
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-
average assumptions for grants in 1997, 1996 and 1995, respectively:
dividend yields of 1.0%, 1.0% and 1.5%, expected volatility of 29.0%, 30.0%
and 30.0%, risk-free interest rates of 6.5%, 5.8% and 7.4% and expected
lives of 9 years, 9 years and 7 years. The weighted-average fair value of
options granted during 1997, 1996 and 1995 was $17.29, $15.08 and $11.23,
respectively. The Company accounts for the Option Plans under APB 25 and,
accordingly, no compensation costs have been recognized in the accompanying
statements of income for 1997, 1996 or 1995. Had compensation costs for the
Option Plans been determined under SFAS 123, pro forma net income would
have been $156.8 million, $86.0 million and $22.2 million, respectively,
for 1997, 1996 and 1995. Pro forma basic and diluted earnings per share
would have been $2.61 and $2.59, respectively, for 1997, $1.43 and $1.42,
respectively, for 1996 and $0.37 for both basic and diluted earnings per
share in 1995. Since SFAS 123 was only applied to options granted
subsequent to December 31, 1994, the resulting pro forma compensation cost
may not be representative of that to be expected in future years.
NOTE 10 - SHAREHOLDERS' EQUITY
Authorized capital at January 3, 1998 consisted of 80 million shares of no
par value common stock and 30 million shares of no par value preferred
stock, issuable in series. At January 3, 1998, approximately 5.1 million
shares and 53,024 shares of common stock were reserved for issuance under
the Option Plans and the Directors Plan, respectively. There was no
preferred stock outstanding.
The Company's policy is to pay quarterly dividends on common shares at an
annual rate of 40 cents per share.
During 1996, the Company announced a program to repurchase up to 5% of its
outstanding common stock. As of January 3, 1998 the Company had repurchased
395,400 shares at a cost of $13.9 million.
Changes in shareholders' equity were as follows:
<TABLE>
<CAPTION>
CUMULATIVE
ADDITIONAL FOREIGN TOTAL COMMON COMMON
COMMON PAID-IN RETAINED CURRENCY SHAREHOLDERS' SHARES
(IN THOUSANDS, EXCEPT SHARE DATA) STOCK CAPITAL EARNINGS ADJUSTMENT EQUITY OUTSTANDING
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $320,121 $165,541 $634,717 $(39,738) $1,080,641 59,478,108
Net income - - 23,331 - 23,331 -
Cash dividends declared
($.30 per share) - - (17,913) - (17,913) -
Translation adjustments - - - (859) (859) -
Distribution of real estate and
resorts business - - (581,866) - (581,866) -
Issuance of common stock 376 4,725 - - 5,101 376,631
- -----------------------------------------------------------------------------------------------------------------------------
Balance, December 30, 1995 320,497 170,266 58,269 (40,597) 508,435 59,854,739
Net Income - - 89,031 - 89,031 -
Cash dividends declared
($.40 per share) - - (24,020) - (24,020) -
Translation adjustments - - - (21,244) (21,244) -
Issuance of common stock 374 10,858 - - 11,232 373,952
Repurchase of common stock (395) (13,479) - - (13,874) (395,400)
- -----------------------------------------------------------------------------------------------------------------------------
Balance, December 28, 1996 320,476 167,645 123,280 (61,841) 549,560 59,833,291
Net Income - - 160,164 - 160,164 -
Cash dividends declared
($.40 per share) - - (23,988) - (23,988) -
Translation adjustments - - - (25,908) (25,908) -
Issuance of common stock 231 6,413 - - 6,644 231,156
- -----------------------------------------------------------------------------------------------------------------------------
Balance, January 3, 1998 $320,707 $174,058 $259,456 $(87,749) $ 666,472 60,064,447
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
DOLE FOOD COMPANY, INC. 33
<PAGE>
NOTE 11 - CONTINGENCIES
At January 3, 1998, the Company was guarantor of approximately $98 million
of indebtedness of certain key fruit suppliers and other entities integral
to the Company's operations.
The Company has ordered two refrigerated container vessels from HDW in
Kiel, Germany, which are scheduled for delivery in late 1999. The cost per
ship is approximately DM 100 million.
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 legal counsel, none of such
claims is expected to have a material adverse effect on the Company's
financial position or results of operations.
NOTE 12 - LEASE COMMITMENTS
The Company has obligations under noncancelable operating leases, primarily
for ship charters and containers, and certain equipment and office
facilities. Lease terms are for less than the economic life of the
property. Certain agricultural land leases provide for increases in minimum
rentals based on production. Total rental expense was $182.2 million,
$158.7 million and $147.3 million (net of sublease income of $10.6 million,
$12.4 million and $9.4 million) for 1997, 1996 and 1995, respectively.
During 1995, the Company entered into an agreement with a bank syndicate
for the sale and seven year leaseback of certain vessels. This transaction
generated net proceeds of approximately $133 million.
At January 3, 1998, the Company's aggregate minimum rental commitments,
before sublease income, were as follows (in millions): 1998 - $147.9; 1999
- $124.6; 2000 - $81.9; 2001 - $50.3; 2002 - $151.8 and thereafter - $65.4.
Total future sublease income is $27.6 million.
NOTE 13 - INCOME TAXES
Income tax expense (benefit) was as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996 1995
--------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal, state and local $ 2,810 $ 1,882 $ 2,292
Foreign 20,715 19,359 23,279
--------------------------------------------------------------------------
23,525 21,241 25,571
Deferred
Federal, state and local 12,285 (444) 30,656
Foreign (710) (1,297) (227)
--------------------------------------------------------------------------
11,575 (1,741) 30,429
--------------------------------------------------------------------------
$35,100 $19,500 $56,000
--------------------------------------------------------------------------
--------------------------------------------------------------------------
</TABLE>
Pretax earnings attributable to foreign operations were approximately $147
million, $173 million and $181 million for 1997, 1996 and 1995,
respectively. Undistributed earnings of foreign subsidiaries, which have
been or are intended to be permanently invested, aggregated $1.3 billion at
January 3, 1998.
The Company's reported income tax expense varied from the expense
calculated using the U.S. federal statutory tax rate for the following
reasons:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996 1995
--------------------------------------------------------------------------
<S> <C> <C> <C>
Expense computed at
U.S. federal statutory
income tax rate $68,341 $37,986 $61,538
Foreign income taxed
at different rates (36,437) (21,656) (16,366)
Dividends from
subsidiaries 456 618 -
State and local income
tax, net of federal
income tax benefit 602 1,100 4,293
Other 2,138 1,452 6,535
--------------------------------------------------------------------------
Reported income tax
expense $35,100 $19,500 $56,000
--------------------------------------------------------------------------
--------------------------------------------------------------------------
</TABLE>
Total income tax payments (net of refunds) were $17.3 million, $(1.6)
million and $51.3 million for 1997, 1996 and 1995, respectively.
Deferred tax assets (liabilities) were comprised of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996 1995
--------------------------------------------------------------------------
<S> <C> <C> <C>
Operating reserves $24,892 $45,246 $36,840
Accelerated depreciation (25,290) (21,717) (37,868)
Inventory valuation
methods 3,024 3,670 3,690
Effect of differences
between book values
assigned in prior
acquisitions and
historical tax values (33,100) (36,941) (37,927)
Postretirement benefits 34,278 33,946 31,263
Tax credit carryforward 1,263 4,987 39,310
Net operating loss
carryforward 86,670 77,685 79,616
Other, net (11,729) (18,677) (22,308)
--------------------------------------------------------------------------
$80,008 $88,199 $92,616
--------------------------------------------------------------------------
--------------------------------------------------------------------------
</TABLE>
34 DOLE FOOD COMPANY, INC.
<PAGE>
The Company has recorded deferred tax assets of $86.7 million reflecting
the benefit of approximately $229 million in federal and state net
operating loss carryovers which will, if unused, begin to expire in 2009.
The tax credit carryforward amount of $1.3 million is comprised of general
business credits which begin to expire in 2008.
Total deferred tax assets and deferred tax liabilities were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1997 1996 1995
--------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets $226,028 $253,831 $281,392
Deferred tax liabilities (146,020) (165,632) (188,776)
--------------------------------------------------------------------------
$ 80,008 $ 88,199 $ 92,616
--------------------------------------------------------------------------
--------------------------------------------------------------------------
</TABLE>
The Company remains contingently liable with respect to certain tax credits
sold with recourse by Flexi-Van Corporation ( Flexi-Van ), the Company's
former transportation equipment leasing business, to a third party in 1981.
These credits, which have been contested by the Internal Revenue Service,
continue to be litigated by Flexi-Van. Flexi-Van, which separated from the
Company in 1987 and was subsequently acquired by David H. Murdock, has
indemnified the Company against obligations that might result from the
resolution of this matter.
NOTE 14 - GEOGRAPHIC AREA SEGMENT INFORMATION
The Company's only significant segment of business is food products.
Product transfers between geographic areas are accounted for based on the
estimated fair market value of the products. Revenue, operating income and
identifiable assets pertaining to the geographic areas in which the Company
operates are presented as follows:
<TABLE>
<CAPTION>
(IN MILLIONS) 1997 1996 1995
--------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
North America $2,091 $1,843 $1,959
Latin America 909 801 771
Asia 1,038 974 914
Europe 1,180 1,040 959
Intercompany
elimination (882) (818) (799)
--------------------------------------------------------------------------
$4,336 $3,840 $3,804
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Operating income (loss)
North America $ 126 $ 76 $ 72
Latin America 137 149 138
Asia 24 17 14
Europe (9) - 3
Corporate (34) (78) (34)
--------------------------------------------------------------------------
$ 244 $ 164 $ 193
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Identifiable assets
North America $ 891 $ 980 $ 973
Latin America 794 695 698
Asia 235 289 327
Europe 477 446 339
Corporate 67 77 105
--------------------------------------------------------------------------
$2,464 $2,487 $2,442
--------------------------------------------------------------------------
--------------------------------------------------------------------------
</TABLE>
NOTES: REVENUE INCLUDES INTER-AREA TRANSFERS FROM LATIN AMERICA TO NORTH
AMERICA, ASIA AND EUROPE OF $603 MILLION, $542 MILLION AND $514 MILLION IN
1997, 1996 AND 1995, RESPECTIVELY; FROM ASIA TO NORTH AMERICA AND EUROPE OF
$200 MILLION, $170 MILLION AND $184 MILLION IN 1997, 1996 AND 1995,
RESPECTIVELY; FROM NORTH AMERICA TO ASIA AND EUROPE OF $50 MILLION, $78
MILLION AND $72 MILLION IN 1997, 1996 AND 1995, RESPECTIVELY; AND FROM
EUROPE TO NORTH AMERICA, ASIA AND LATIN AMERICA OF $29 MILLION, $28 MILLION
AND $29 MILLION IN 1997, 1996 AND 1995, RESPECTIVELY.
CORPORATE OPERATING LOSS FOR 1996 INCLUDES THE RESTRUCTURING CHARGE OF $50
MILLION.
DOLE FOOD COMPANY, INC. 35
<PAGE>
NOTE 15 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table presents summarized quarterly results.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
(IN THOUSANDS, EXCEPT PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER YEAR
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997
Revenue $964,992 $1,107,804 $1,178,301 $1,085,023 $4,336,120
Gross Margin 151,738 191,006 156,157 144,942 643,843
Net income 42,043 70,429 24,443 23,249 160,164
-----------------------------------------------------------------------------------------------------------------------
Net income per diluted common share $ 0.70 $ 1.17 $ 0.40 $ 0.38 $ 2.65
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
1996
Revenue $814,438 $1,041,191 $1,093,586 $ 891,088 $3,840,303
Gross Margin 126,990 179,592 155,961 121,415 583,958
Net income (loss) 30,009 63,580 22,966 (27,524) 89,031
-----------------------------------------------------------------------------------------------------------------------
Net income (loss) per diluted common share $ 0.50 $ 1.05 $ 0.38 $ (0.46) $ 1.47
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
THE NET LOSS FOR THE FOURTH QUARTER OF 1996 INCLUDES A CHARGE OF $50
MILLION, BEFORE TAX, RELATED TO THE RESTRUCTURING OF THE COMPANY'S DRIED
FRUIT BUSINESS.
ALL QUARTERS HAVE TWELVE WEEKS, EXCEPT THE FOURTH QUARTER OF 1997 WHICH HAS
THIRTEEN WEEKS AND THE THIRD QUARTERS OF BOTH YEARS WHICH HAVE SIXTEEN
WEEKS.
NOTE 16 - COMMON STOCK DATA (UNAUDITED)
The following table shows the market price range of the Company's common
stock for each quarter in 1997 and 1996.
<TABLE>
<CAPTION>
HIGH LOW
--------------------------------------------------------------
<S> <C> <C>
1997
First Quarter $40 1/4 $33 3/8
Second Quarter 43 3/8 37 3/4
Third Quarter 46 15/16 39 1/16
Fourth Quarter 49 5/8 43 9/16
--------------------------------------------------------------
Year $49 5/8 $33 3/8
--------------------------------------------------------------
--------------------------------------------------------------
1996
First Quarter $42 3/4 $34 1/8
Second Quarter 43 37 1/4
Third Quarter 43 1/2 38 7/8
Fourth Quarter 40 1/4 32 7/8
--------------------------------------------------------------
Year $43 1/2 $32 7/8
--------------------------------------------------------------
--------------------------------------------------------------
</TABLE>
36 DOLE FOOD COMPANY, INC.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Dole Food Company, Inc.:
We have audited the accompanying consolidated balance sheets of Dole Food
Company, Inc., (a Hawaii corporation) and subsidiaries as of January 3,
1998 and December 28, 1996, and the related consolidated statements of
income and cash flow for the years ended January 3, 1998, December 28,
1996, and December 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dole
Food Company, Inc. and subsidiaries as of January 3, 1998 and December 28,
1996 and the results of their operations and their cash flow for the years
ended January 3, 1998, December 28, 1996, and December 30, 1995, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Los Angeles, California
February 6, 1998
DOLE FOOD COMPANY, INC. 37
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL POSITION
1997 COMPARED WITH 1996
REVENUE - Revenue increased 13% to $4,336.1 million in 1997 from $3,840.3
million in 1996. The increase in revenue is primarily attributable to
higher worldwide banana volumes; increased volumes in fresh cut salads and
favorable pricing for the fresh vegetable business; continued growth at the
Honduran beverage operation; newly acquired businesses; and an additional
week in fiscal year 1997. The Company was able to grow revenue in spite of
adverse currency movements in 1997.
SELLING, MARKETING AND ADMINISTRATIVE EXPENSES - Selling, marketing and
administrative expenses were $399.8 million or only 9.2% of revenue in 1997
compared to $369.7 million or 9.6% of revenue in 1996. The increased
expense is due to higher sales activity in existing product lines and the
acquisition of new businesses, partially offset by the closure of the dried
fruit facility.
OPERATING INCOME - Operating income improved to $244.0 million in 1997 from
$214.3 million before the restructuring charge in 1996. Higher earnings in
1997 were the result of increased volumes of fresh cut salads and favorable
pricing in the fresh vegetables business, and growth in the banana
business. In addition, the processed pineapple and Honduran beverage
businesses posted higher results in 1997, and the closure of the dried
fruit facility in the second quarter reduced losses.
The European Union ("E.U.") banana regulations which impose quotas and
tariffs on bananas remained in full effect in 1997, and continue in effect
in 1998. The World Trade Organization upheld in a report during 1997, a
complaint from the United States, Ecuador, Mexico, Honduras, and Guatemala,
that the E.U. had installed a "protectionist and discriminatory" banana
trade regime by favoring imports from former European colonies in Africa
and the Caribbean. Trade negotiations and discussions continue between the
E.U., the United States and the individual banana exporting countries.
These trade negotiations could lead to further changes in the regulations
governing banana exports to the E.U. The net impact of these changing
regulations on the Company's future results of operations is not
determinable at this time.
The Company distributes its products in more than 90 countries throughout
the world. Its international sales are usually transacted in U.S. dollars
and major European and Asian currencies. Certain costs are incurred in
currencies different from those that are received from the sale of the
product. While results of operations may be affected by fluctuations in
currency exchange rates in both the sourcing and selling locations, the
Company has historically followed a policy of not attempting to hedge these
exposures.
INTEREST EXPENSE, NET - Interest expense, net of interest income, decreased
to $56.8 million in 1997 from $60.3 million in 1996, due to lower average
debt levels.
OTHER INCOME (EXPENSE) - Other income for 1997 increased $3.5 million from
1996 primarily due to the gain on sale of certain investments and fixed
assets.
INCOME TAXES - The Company's effective income tax rate was 18% in 1997 and
1996.
YEAR 2000 - The Company has made an assessment 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 will solve a large part of the remaining issues by the
Company's internal target date of December 1998. All remaining remediation
work also has a targeted completion date of December 1998, and the total
cost to remediate will not be material to the Company's results of
operations, liquidity or capital resources.
NEW ACCOUNTING PRONOUNCEMENTS -- In June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS 130") and Statement
38 DOLE FOOD COMPANY, INC.
<PAGE>
of Financial Accounting Standards No. 131, "Disclosures about Segments of
an Enterprise and Related Information" ("SFAS 131"). The Company will
adopt SFAS 130 and SFAS 131 in 1998. In accordance with SFAS 131, the
Company is currently evaluating the additional business segments to be
reported in 1998. Since SFAS 130 and SFAS 131 require additional
disclosure only, they will have no effect on the financial condition or
results of operations of the Company.
1996 COMPARED WITH 1995
REVENUE -- Revenue increased 4% to $3,840.3 million in 1996 from
$3,694.5 million in 1995, excluding revenue from the juice business sold
in 1995. The revenue growth resulted from a combination of increased
sales volumes and favorable pricing and 1996 business acquisitions and
joint ventures.
SELLING, MARKETING AND ADMINISTRATIVE EXPENSES -- Selling, marketing and
administrative expenses decreased 6% to $369.7 million or 9.6% of
revenue in 1996 from $392.7 million or 10.3% of revenue in 1995. Of the
decrease, $17.1 million resulted from the sale of the juice business in
1995.
RESTRUCTURING CHARGE -- In 1996, the Company implemented a formal plan
to close its dried fruit facility located in Fresno, California which
had suffered continued losses. During the fourth quarter of 1996, a
restructuring charge of $50.0 million ($41.0 million after tax or 68
cents per diluted share) was recorded related to the closure of this
facility. Principal components of the charge were provisions for asset
write-downs, contract terminations and severance payments. The closure
of this facility was completed in the second quarter of 1997.
OPERATING INCOME -- Operating income before the restructuring charge
improved 10.9% to $214.3 million in 1996 compared to $193.3 million in
1995. Processed pineapple operations improved in 1996 due to favorable
pricing and reduced shipping costs. Fresh pineapple operations benefited
from the closure of operations in the Dominican Republic which
historically generated negative returns. Partially offsetting the
improved results from the pineapple operations was the return to normal
pricing levels for the fresh vegetable business which benefited from
favorable pricing in 1995 due to flooding. The return to normal pricing
levels was somewhat mitigated by increased volumes for the fresh cut
salad business.
INTEREST EXPENSE, NET -- Interest expense, net of interest income,
decreased to $60.3 million in 1996 from $73.7 million in 1995 as a
result of lower average debt levels throughout the year.
OTHER INCOME (EXPENSE) -- Other income for 1996 increased $10.0 million
from 1995 primarily due to the gain on the sale of certain investments
and other assets and increased earnings from joint ventures.
INCOME TAXES -- The Company's effective tax rate decreased to 18% in
1996 as a result of a change in the mix of the Company's foreign and
domestic earnings. The 1995 tax rate was significantly impacted by the
sale of the juice business.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operational and investing activities in 1997 were financed
by funds generated internally and cash on hand at December 28, 1996.
Cash and short-term investments were $31.2 million at January 3, 1998
compared to $34.3 million at December 28, 1996.
Operating activities generated cash flow of $291.0 million in 1997
compared to $95.0 million in 1996. The improvement results from higher
operating income and a large decrease in working capital requirements
following the closure of the dried fruit business during 1997.
In the second quarter of 1997, the Company completed the closure of its
Fresno, California dried fruit operations.
DOLE FOOD COMPANY, INC. 39
<PAGE>
This has relieved operations of sizable losses and has allowed for a
substantial reduction in working capital requirements associated with
this business. This initiative was taken as part of the Company's
overall plan to dispose of or liquidate assets which do not meet and are
not anticipated to meet the Company's minimum return on investment
requirements.
Capital expenditures for the acquisition and maintenance of productive
assets were $129.2 million in 1997. These expenditures were funded with
cash provided by current year operations and the proceeds from the sale
of existing assets and agricultural properties. The Company also
acquired and invested in production operations in Latin America and Asia
and distribution operations in Europe for an aggregate cash purchase
price of $40.0 million.
The Company has ordered two refrigerated container vessels from HDW in
Kiel, Germany. The vessels are scheduled for delivery in late 1999, and
will further improve the Company's cost structure. The cost per ship is
approximately DM 100 million.
In January 1998, the Company announced plans to move to a new
headquarters facility in Westlake Village, California. Construction of
the complex is anticipated to begin in 1998, and the company plans to
occupy these leased facilities during 1999.
During 1997 the Company used its strong cash flow from operations to
reduce net debt by approximately $154 million. The Company's net debt to
net debt and equity ratio improved from 62% at December 28,1996 to 53%
at January 3, 1998. Debt is now primarily composed of existing long-term
bonds.
In July 1997, the Company extended its $600 million, 5-year revolving
credit facility (the "Facility") to 2002. In November 1997, based on its
strong operating cash flow, the Company reduced this facility to $400
million. Provisions under the Facility require the Company to comply
with certain financial covenants which include a maximum permitted ratio
of consolidated debt to net worth and a minimum required fixed charge
coverage ratio. At January 3, 1998 no borrowings were outstanding under
the Facility. The Company may also borrow under uncommitted lines of
credit at rates offered from time to time by various banks that may not
be lenders under the Facility. Net borrowings outstanding under the
uncommitted lines of credit totaled $14.6 million at January 3, 1998.
During 1996, the Company announced a program to repurchase up to 5% of
its outstanding common stock. As of December 28, 1996 the Company had
repurchased 395,400 shares at a cost of $13.9 million. No repurchases
were made during 1997. The Company does not expect the stock repurchase
program to affect its ability to fund operating requirements, capital
expenditures or acquisitions.
The Company paid four quarterly dividends of 10 cents per share on its
common stock totaling $24.0 million in 1997.
The Company believes that cash from operations and its cash position
will be sufficient to enable it to meet its capital expenditure, debt
maturity, common stock repurchase, dividend payment and other funding
requirements.
40 DOLE FOOD COMPANY, INC.
<PAGE>
RESULTS OF OPERATIONS AND SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA) 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue $4,336 $3,840 $3,804 $3,499 $3,108
Cost of products sold 3,692 3,256 3,218 2,966 2,609
- -----------------------------------------------------------------------------------------------------------------------------
Gross margin 644 584 586 533 499
Selling, marketing, and administrative expenses 400 370 393 395 333
Restructuring charge and cost reduction program - 50 - - 43
- -----------------------------------------------------------------------------------------------------------------------------
Operating income 244 164 193 138 123
Interest expense - net (57) (60) (74) (67) (48)
Net gain on assets sold or held for disposal - - 62 - -
Other income (expense) - net 8 5 (5) (3) (9)
- -----------------------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes 195 109 176 68 66
Income taxes (35) (20) (56) (10) (4)
- -----------------------------------------------------------------------------------------------------------------------------
Net income from continuing operations 160 89 120 58 62
Net income from discontinued operations - - (97) 10 16
- -----------------------------------------------------------------------------------------------------------------------------
Net income 160 89 23 68 78
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Diluted earnings per common share
Continuing operations $ 2.65 $ 1.47 $ 2.00 $ 0.98 $ 1.04
Discontinued operations - - (1.61) 0.16 0.26
- -----------------------------------------------------------------------------------------------------------------------------
Net income $ 2.65 $ 1.47 $ 0.39 $ 1.14 $ 1.30
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Other statistics
Working capital $ 407 $ 464 $ 480 $ 495 $ 391
Total assets 2,464 2,487 2,442 3,685 3,159
Long-term debt 755 904 896 1,555 1,111
Total debt 768 926 920 1,609 1,190
Common shareholders' equity 666 550 508 1,081 1,052
Annual cash dividends per common share 0.40 0.40 0.40 0.40 0.40
Capital additions for continuing operations 129 110 90 212 174
Depreciation and amortization from
continuing operations 112 111 113 120 106
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF DOLE FOOD COMPANY, INC.
There are no parents of the Registrant.
Registrant's consolidated subsidiaries are shown below together with the
percentage of voting securities owned and the state or jurisdiction of
organization of each subsidiary. The names have been omitted for subsidiaries
which, if considered in the aggregate as a single subsidiary, do not
constitute a significant subsidiary. Subsidiaries of subsidiaries are indented
in the following table:
<TABLE>
<CAPTION>
Percent of
Outstanding
Voting Securities
Owned as of
Subsidiaries of Registrant January 3, 1998
- -------------------------- -----------------
<S> <C>
Dole Holdings, Inc. (fka Castle & Cooke Fresh Fruit Company) 100%
(Nevada)
Beebe Orchard Company 100%
(Delaware)
Dole Citrus 100%
(California)
Dole Fresh Fruit Company 100%
(Nevada)
Dole Ocean Liner Express, Inc. 100%
(Nevada)
Dole Europe Company 100%
(Delaware)
Dole Fresh Fruit Europe Ltd. & Co. 100%
(Federal Republic of Germany)
Dole Fresh Fruit International, Inc. 100%
(Panama)
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Percent of
Outstanding
Voting Securities
Owned as of
Subsidiaries of Registrant January 3, 1998
- -------------------------- -----------------
<S> <C>
Dole Holdings, Inc. (cont'd)
Standard Fruit Company 100%
(Delaware)
Cerveceria Hondurena, S.A. 82%
(Honduras)
Manufacturas de Carton S.A 100%
(Honduras)
Compania Agropecuaria el Porvenir S.A. 100%
(Honduras)
Fabrica de Manteca y Jabon Atlantida S.A. 51%
(Honduras)
Standard Fruit Company de Costa Rica, S.A. 100%
(Costa Rica)
Wells & Wade Fruit Company 100%
(Washington)
Ashford Company Limited 100%
(Bermuda)
Castle & Cooke Worldwide Limited 100%
(Hong Kong)
Standard Fruit Company (Bermuda) Ltd. 100%
(Bermuda)
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Percent of
Outstanding
Voting Securities
Owned as of
Subsidiaries of Registrant January 3, 1998
- -------------------------- -----------------
<S> <C>
Castle & Cooke Worldwide Limited (cont'd)
Dole Fresh Fruit International, Limited 100%
(Liberia)
Productora Cartonera S.A. 51%
(Ecuador)
Solvest, Ltd. 100%
(Bermuda)
Alppha Sideral S.A. 100%
(Costa Rica)
Dole Italia s.p.a 100%
(Italy)
Inversiones y Valores Montecristo, S.A. 74%
(Honduras)
Standard Fruit de Honduras, S.A. 100%
(Honduras)
Agricola Santa Ines, S.A. 98%
(Honduras)
Union de Bananeros Ecuatorianos, S.A. 100%
(Ecuador)
Productora Cartonera S.A. 49%
(Ecuador)
Tecnicas Baltime de Colombia, S.A. 100%
(Colombia)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Percent of
Outstanding
Voting Securities
Owned as of
Subsidiaries of Registrant January 3, 1998
- -------------------------- -----------------
<S> <C>
Castle & Cooke Worldwide Limited (cont'd)
Comafrica, spa 51%
(Italy)
Dole Europe B.V. 100%
(Netherlands)
Dole (Deutschland) GmbH 100%
(Germany)
Paul Kempowski GmbH & Co. KG 100%
(Germany)
Dole Food Espana, S.A. 100%
(Spain)
Jesus Alonso Gaytan, S.A. 100%
(Spain)
Pascual Hermanos 91%
(Spain)
Soleil Holding France S.A. 100%
(France)
Saman, S.A. 100%
(France)
Muriserries Francaises 100%
(France)
Dole Chile S.A. 100%
(Chile)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Percent of
Outstanding
Voting Securities
Owned as of
Subsidiaries of Registrant January 3, 1998
- -------------------------- -----------------
<S> <C>
Castle & Cooke Worldwide Limited (cont'd)
Cartones San Fernando S.A. 90%
(Chile)
Inversiones del Pacifico, S.A. 100%
(Chile)
Dole Thailand Limited 64%
(Thailand)
Compania Financiera de Costa Rica, S.A. 100%
(Costa Rica)
Dole Bakersfield, Inc. 100%
(California)
Dole Fresh Vegetables, Inc. 100%
(California)
Bud Antle, Inc. 100%
(California)
Royal Packing Co. 100%
(California)
Dole Japan, Ltd. 100%
(Japan)
Dole Philippines, Inc. 99%
(Republic of the Philippines)
S & J Ranch, Inc. 100%
(California)
Dole Orland, Inc. (fka Dole Nut Company) 100%
(California)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Percent of
Outstanding
Voting Securities
Owned as of
Subsidiaries of Registrant January 3, 1998
- -------------------------- -----------------
<S> <C>
S&J Ranch, Inc. (cont'd)
Dole Dried Fruit and Nut Company, 10%
a California general partnership
M K Development, Inc. 100%
(Hawaii)
Dole Dried Fruit and Nut Company,
a California general partnership 90%
La Petite d'Agen, Inc. 100%
(Hawaii)
Cerulean, Inc. 61%
(Hawaii)
Muscat, Inc. 100%
(Hawaii)
Calicahomes, Inc. 100%
(California)
Dole Diversified, Inc. (fka Castle & Cooke Land Company, Inc.) 100%
(Hawaii)
Zante Currant, Inc. 100%
(Hawaii)
Blue Anthurium, Inc. 100%
(Hawaii)
Cerulean, Inc. 39%
(Hawaii)
Alyssum, Inc. 100%
(California)
</TABLE>
6
<PAGE>
CONSENT OF INDEPENDENT OF PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports dated February 6, 1998 included (or incorporated by reference) in
this Form 10-K into Dole Food Company, Inc.'s previously filed Registration
Statements on Form S-3 Registration Nos. 33-41480, 33-64984 and 333-07849;
Form S-8 Registration Nos. 2-87475, 33-594, 33-28782, 33-60643, 33-60641,
33-42152, 333-13739 and 333-06949 and Form N-2 Registration Nos. 333-325 and
811-7499.
/s/ ARTHUR ANDERSEN LLP
Los Angeles, California
April 2, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR<F1>
<FISCAL-YEAR-END> JAN-03-1998<F1>
<PERIOD-START> DEC-29-1996<F1>
<PERIOD-END> JAN-03-1998<F1>
<CASH> 31,202
<SECURITIES> 0
<RECEIVABLES> 594,943
<ALLOWANCES> 60,099
<INVENTORY> 468,692
<CURRENT-ASSETS> 1,083,176
<PP&E> 1,658,565
<DEPRECIATION> 634,318
<TOTAL-ASSETS> 2,463,895
<CURRENT-LIABILITIES> 676,439
<BONDS> 754,849
0
0
<COMMON> 320,707
<OTHER-SE> 345,765
<TOTAL-LIABILITY-AND-EQUITY> 2,463,895
<SALES> 4,336,120
<TOTAL-REVENUES> 4,336,120
<CGS> 3,692,277
<TOTAL-COSTS> 3,692,277
<OTHER-EXPENSES> 399,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64,589
<INCOME-PRETAX> 195,264
<INCOME-TAX> 35,100
<INCOME-CONTINUING> 160,164
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 160,164
<EPS-PRIMARY> 2.67<F2>
<EPS-DILUTED> 2.65<F3>
<FN>
<F1>THE COMPANY'S FISCAL YEAR ENDS ON THE SATURDAY CLOSEST TO DECEMBER 31,
FISCAL YEAR 1997 ENDED JANUARY 3, 1998 AND INCLUDED 53 WEEKS. THE
FIRST TWO QUARTERS OF 1997 HAD 12 WEEKS, THE THIRD QUARTER OF 1997
HAD 16 WEEKS AND THE FOURTH QUARTER OF 1997 HAD 13 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>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> YEAR<F1> OTHER<F1> OTHER<F1> OTHER<F1>
YEAR<F1>
<FISCAL-YEAR-END> DEC-30-1995<F1> DEC-28-1996<F1> DEC-28-1996<F1> DEC-28-1996<F1>
DEC-28-1996<F1>
<PERIOD-START> JAN-01-1995<F1> DEC-31-1995<F1> DEC-31-1995<F1> DEC-31-1995<F1>
DEC-31-1995<F1>
<PERIOD-END> DEC-30-1995<F1> MAR-23-1996<F1> JUN-15-1996<F1> OCT-05-1996<F1>
DEC-28-1996<F1>
<CASH> 72,151 46,782 35,173 31,057
34,342
<SECURITIES> 0 0 0 0
0
<RECEIVABLES> 509,297 519,794 554,469 513,543
580,020
<ALLOWANCES> 46,994 47,187 46,851 45,753
61,754
<INVENTORY> 559,660 558,667 515,153 513,427
526,062
<CURRENT-ASSETS> 1,137,201 1,135,942 1,113,646 1,056,525
1,125,824
<PP&E> 1,571,183 1,754,039 1,776,890 1,622,223
1,635,058
<DEPRECIATION> 554,192 736,439 753,983 600,809
610,923
<TOTAL-ASSETS> 2,442,192 2,447,272 2,415,771 2,386,398
2,486,807
<CURRENT-LIABILITIES> 656,890 577,469 660,003 629,832
661,930
<BONDS> 895,998 959,682 790,179 781,104
903,807
0 0 0 0
0
0 0 0 0
0
<COMMON> 320,497 320,633 320,697 320,819
320,476
<OTHER-SE> 187,938 209,631 265,715 278,891
229,084
<TOTAL-LIABILITY-AND-EQUITY> 2,442,192 2,447,272 2,415,771 2,386,398
2,486,807
<SALES> 3,803,846 814,438 1,855,629 2,949,215
3,840,303
<TOTAL-REVENUES> 3,803,846 814,438 1,855,629 2,949,215
3,840,303
<CGS> 3,217,869 687,448 1,549,047 2,486,672
3,256,345
<TOTAL-COSTS> 3,217,867 687,448 1,549,047 2,486,672
3,256,345
<OTHER-EXPENSES> 398,123 79,815 168,238 276,310
369,675
<LOSS-PROVISION> 0 0 0 0
0
<INTEREST-EXPENSE> 81,186 17,002 33,384 53,287
68,699
<INCOME-PRETAX> 175,824 36,509 114,089 142,155
108,531
<INCOME-TAX> 56,000 6,500 20,500 25,600
19,500
<INCOME-CONTINUING> 119,824 30,009 93,589 116,555
89,031
<DISCONTINUED> (96,493) 0 0 0
0
<EXTRAORDINARY> 0 0 0 0
0
<CHANGES> 0 0 0 0
0
<NET-INCOME> 23,331 30,009 93,589 116,555
89,031
<EPS-PRIMARY> 0.39<F2> 0.50<F2> 1.56<F2> 1.94<F2>
1.48<F2>
<EPS-DILUTED> 0.39<F3> 0.50<F3> 1.55<F3> 1.93<F3>
1.47<F3>
<FN>
<F1>THE COMPANY'S FISCAL YEAR ENDS ON THE SATURDAY CLOSEST TO DECEMBER 31.
FISCAL YEAR 1996 ENDED DECEMBER 28, 1996 AND INCLUDED 52 WEEKS. FISCAL
YEAR 1995 ENDED DECEMBER 30, 1995 AND INCLUDED 52 WEEKS. ALL QUARTERS
HAVE 12 WEEKS, EXCEPT THE THIRD QUARTERS OF BOTH YEARS WHICH HAVE 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
RELECTS DILUTED EARNINGS PER SHARE.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> OTHER<F1> OTHER<F1> OTHER<F1>
<FISCAL-YEAR-END> JAN-03-1998<F1> JAN-03-1998<F1> JAN-03-1998<F1>
<PERIOD-START> DEC-29-1996<F1> DEC-29-1996<F1> DEC-29-1996<F1>
<PERIOD-END> MAR-22-1997<F1> JUN-14-1997<F1> OCT-04-1997<F1>
<CASH> 25,773 23,427 43,778
<SECURITIES> 0 0 0
<RECEIVABLES> 620,457 633,355 547,621
<ALLOWANCES> 58,410 55,416 57,949
<INVENTORY> 518,724 431,965 445,011
<CURRENT-ASSETS> 1,159,057 1,082,148 1,020,889
<PP&E> 1,650,391 1,653,260 1,591,898
<DEPRECIATION> 628,064 637,329 610,954
<TOTAL-ASSETS> 2,542,043 2,439,648 2,358,563
<CURRENT-LIABILITIES> 656,373 659,474 610,113
<BONDS> 936,044 761,635 730,947
0 0 0
0 0 0
<COMMON> 320,525 320,778 320,852
<OTHER-SE> 249,089 319,118 330,974
<TOTAL-LIABILITY-AND-EQUITY> 2,542,043 2,439,648 2,358,563
<SALES> 964,992 2,072,796 3,251,097
<TOTAL-REVENUES> 964,992 2,072,796 3,251,097
<CGS> 813,254 1,730,052 2,752,196
<TOTAL-COSTS> 813,254 1,730,052 2,752,196
<OTHER-EXPENSES> 90,939 181,737 291,833
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 16,899 31,964 50,683
<INCOME-PRETAX> 51,243 137,172 167,015
<INCOME-TAX> 9,200 24,700 30,100
<INCOME-CONTINUING> 42,043 112,472 136,915
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 42,043 112,472 136,915
<EPS-PRIMARY> 0.70<F2> 1.88<F2> 2.29<F2>
<EPS-DILUTED> 0.70<F3> 1.87<F3> 2.27<F3>
<FN>
<F1>THE COMPANY'S FISCAL YEAR ENDS ON THE SATURDAY CLOSEST TO DECEMBER 31.
FISCAL YEAR 1997 ENDED JANUARY 3, 1998 AND INCLUDED 53 WEEKS. THE
FIRST TWO QUARTERS OF 1997 HAD 12 WEEKS, THE THIRD QUARTER OF 1997 HAD
16 WEEKS AND THE FOURTH QUARTER OF 1997 HAD 13 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>
