e10vq
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-Q
|
|
|
(Mark One)
|
|
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the quarterly period ended
June 18,
2011
|
or
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the transition period
from to
|
Commission file number 1-4455
Dole Food Company,
Inc.
(Exact name of registrant as
specified in its charter)
|
|
|
Delaware
|
|
99-0035300
|
(State or other jurisdiction
of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
One Dole Drive, Westlake Village, California 91362
(Address of principal executive
offices and zip code)
Registrants telephone number, including area code:
(818) 879-6600
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data file required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). Yes þ No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
|
|
|
|
Large
accelerated
filer o
|
Accelerated
filer þ
|
Non-accelerated
filer o
|
Smaller
reporting
company o
|
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest
practicable date.
|
|
|
|
|
Class
|
|
Shares Outstanding at July 22, 2011
|
|
Common Stock, $0.001 Par Value
|
|
|
88,603,399
|
|
DOLE FOOD
COMPANY, INC.
INDEX
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
Number
|
|
|
|
|
Financial Statements (Unaudited)
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations Quarters and Half Years Ended
June 18, 2011 and June 19, 2010
|
|
|
3
|
|
|
|
Condensed Consolidated Statements of
Comprehensive Income Quarters and Half Years Ended
June 18, 2011 and June 19, 2010
|
|
|
4
|
|
|
|
Condensed Consolidated Balance Sheets
June 18, 2011 and January 1, 2011
|
|
|
5
|
|
|
|
Condensed Consolidated Statements of Cash
Flows Half Years Ended June 18, 2011 and
June 19, 2010
|
|
|
6
|
|
|
|
Condensed Consolidated Statements of
Shareholders Equity Half Years Ended
June 18, 2011 and June 19, 2010
|
|
|
7
|
|
|
|
Notes to Condensed Consolidated Financial
Statements
|
|
|
8
|
|
|
|
Managements Discussion and Analysis of
Financial Condition and Results of Operations
|
|
|
40
|
|
|
|
Quantitative and Qualitative Disclosures About
Market Risk
|
|
|
49
|
|
|
|
Controls and Procedures
|
|
|
50
|
|
|
|
|
|
Legal Proceedings
|
|
|
50
|
|
|
|
Exhibits
|
|
|
50
|
|
|
|
Signatures
|
|
|
51
|
|
|
|
Exhibit Index
|
|
|
52
|
|
|
|
Certification by the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act
|
|
|
53
|
|
|
|
Certification by the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act
|
|
|
54
|
|
|
|
Certification by the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
|
|
|
55
|
|
|
|
Certification by the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
|
|
|
56
|
|
EX-10.24 |
EX-31.1 |
EX-31.2 |
EX-32.1 |
EX-32.2 |
EX-101 INSTANCE DOCUMENT |
EX-101 SCHEMA DOCUMENT |
EX-101 CALCULATION LINKBASE DOCUMENT |
EX-101 LABELS LINKBASE DOCUMENT |
EX-101 PRESENTATION LINKBASE DOCUMENT |
EX-101 DEFINITION LINKBASE DOCUMENT |
2
PART I.
FINANCIAL INFORMATION
|
|
Item 1.
|
FINANCIAL
STATEMENTS
|
DOLE FOOD
COMPANY, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands, except per share data )
|
|
|
|
(Unaudited)
|
|
|
Revenues, net
|
|
$
|
1,915,725
|
|
|
$
|
1,741,522
|
|
|
$
|
3,601,829
|
|
|
$
|
3,347,396
|
|
Cost of products sold
|
|
|
(1,657,519
|
)
|
|
|
(1,540,722
|
)
|
|
|
(3,136,862
|
)
|
|
|
(2,974,389
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
258,206
|
|
|
|
200,800
|
|
|
|
464,967
|
|
|
|
373,007
|
|
Selling, marketing and general and administrative expenses
|
|
|
(130,233
|
)
|
|
|
(120,490
|
)
|
|
|
(254,963
|
)
|
|
|
(235,080
|
)
|
Charges for restructuring and long-term receivables
(Notes 5 and 7)
|
|
|
(5,947
|
)
|
|
|
(762
|
)
|
|
|
(8,702
|
)
|
|
|
(1,370
|
)
|
Gain on asset sales (Note 13)
|
|
|
11
|
|
|
|
950
|
|
|
|
11
|
|
|
|
2,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
122,037
|
|
|
|
80,498
|
|
|
|
201,313
|
|
|
|
139,478
|
|
Other income (expense), net (Note 3)
|
|
|
4,337
|
|
|
|
(5,496
|
)
|
|
|
(35,014
|
)
|
|
|
(889
|
)
|
Interest income
|
|
|
1,166
|
|
|
|
1,516
|
|
|
|
2,484
|
|
|
|
3,118
|
|
Interest expense
|
|
|
(34,837
|
)
|
|
|
(37,138
|
)
|
|
|
(70,307
|
)
|
|
|
(78,188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes and equity
earnings
|
|
|
92,703
|
|
|
|
39,380
|
|
|
|
98,476
|
|
|
|
63,519
|
|
Income taxes
|
|
|
(13,518
|
)
|
|
|
(9,067
|
)
|
|
|
(18,658
|
)
|
|
|
(12,242
|
)
|
Earnings from equity method investments
|
|
|
3,480
|
|
|
|
2,832
|
|
|
|
4,690
|
|
|
|
4,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
82,665
|
|
|
|
33,145
|
|
|
|
84,508
|
|
|
|
55,560
|
|
Income from discontinued operations, net of income taxes
|
|
|
29
|
|
|
|
327
|
|
|
|
231
|
|
|
|
674
|
|
Gain on disposal of discontinued operations, net of income taxes
|
|
|
339
|
|
|
|
|
|
|
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
83,033
|
|
|
|
33,472
|
|
|
|
85,078
|
|
|
|
56,234
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
(1,267
|
)
|
|
|
(1,151
|
)
|
|
|
(2,272
|
)
|
|
|
(1,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
$
|
81,766
|
|
|
$
|
32,321
|
|
|
$
|
82,806
|
|
|
$
|
54,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share Basic (Note 16):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.94
|
|
|
$
|
0.38
|
|
|
$
|
0.96
|
|
|
$
|
0.64
|
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
$
|
0.93
|
|
|
$
|
0.37
|
|
|
$
|
0.95
|
|
|
$
|
0.62
|
|
Earnings per share Diluted (Note 16):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.94
|
|
|
$
|
0.38
|
|
|
$
|
0.96
|
|
|
$
|
0.64
|
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
$
|
0.93
|
|
|
$
|
0.37
|
|
|
$
|
0.94
|
|
|
$
|
0.62
|
|
See Accompanying Notes to Condensed Consolidated Financial
Statements
3
DOLE FOOD
COMPANY, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
|
(Unaudited)
|
|
|
Net income
|
|
$
|
83,033
|
|
|
$
|
33,472
|
|
|
$
|
85,078
|
|
|
$
|
56,234
|
|
Net foreign currency translation adjustment
|
|
|
(3,377
|
)
|
|
|
(11,848
|
)
|
|
|
7,526
|
|
|
|
(24,741
|
)
|
Unrealized hedging gains (losses), net of income taxes of ($61),
($14), ($639) and $166, respectively
|
|
|
(13,114
|
)
|
|
|
(396
|
)
|
|
|
(14,197
|
)
|
|
|
8,406
|
|
Reclassification of realized losses to net income, net of income
taxes of $379, ($26), $680 and ($26), respectively
|
|
|
8,748
|
|
|
|
1,102
|
|
|
|
13,723
|
|
|
|
2,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
75,290
|
|
|
|
22,330
|
|
|
|
92,130
|
|
|
|
42,158
|
|
Less: Comprehensive income attributable to noncontrolling
interests
|
|
|
(1,287
|
)
|
|
|
(1,142
|
)
|
|
|
(2,295
|
)
|
|
|
(1,734
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to Shareholders of Dole Food
Company, Inc.
|
|
$
|
74,003
|
|
|
$
|
21,188
|
|
|
$
|
89,835
|
|
|
$
|
40,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes to Condensed Consolidated Financial
Statements
4
DOLE FOOD
COMPANY, INC.
|
|
|
|
|
|
|
|
|
|
|
June 18,
|
|
|
January 1,
|
|
|
|
2011
|
|
|
2011
|
|
|
|
(In thousands, except per share data)
|
|
|
|
(Unaudited)
|
|
|
ASSETS
|
Cash and cash equivalents
|
|
$
|
238,884
|
|
|
$
|
170,147
|
|
Restricted cash and deposits
|
|
|
5,994
|
|
|
|
51,108
|
|
Receivables, net of allowances of $32,255 and $36,533,
respectively
|
|
|
809,642
|
|
|
|
751,265
|
|
Inventories
|
|
|
790,763
|
|
|
|
734,966
|
|
Prepaid expenses and other assets
|
|
|
65,169
|
|
|
|
67,909
|
|
Deferred income tax assets
|
|
|
40,361
|
|
|
|
36,810
|
|
Assets
held-for-sale
(Note 13)
|
|
|
133,371
|
|
|
|
86,050
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
2,084,184
|
|
|
|
1,898,255
|
|
Investments
|
|
|
96,814
|
|
|
|
87,914
|
|
Property, plant and equipment, net of accumulated depreciation
of $1,142,139 and $1,117,461, respectively
|
|
|
912,935
|
|
|
|
943,030
|
|
Goodwill
|
|
|
407,247
|
|
|
|
407,247
|
|
Intangible assets, net
|
|
|
699,277
|
|
|
|
701,081
|
|
Other assets, net
|
|
|
208,720
|
|
|
|
219,463
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,409,177
|
|
|
$
|
4,256,990
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
Accounts payable
|
|
$
|
562,790
|
|
|
$
|
521,330
|
|
Liabilities related to assets
held-for-sale
(Note 13)
|
|
|
22,098
|
|
|
|
|
|
Accrued liabilities
|
|
|
557,177
|
|
|
|
642,481
|
|
Current portion of long-term debt, net
|
|
|
8,013
|
|
|
|
7,348
|
|
Notes payable
|
|
|
28,080
|
|
|
|
31,922
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,178,158
|
|
|
|
1,203,081
|
|
Long-term debt, net
|
|
|
1,545,036
|
|
|
|
1,564,325
|
|
Deferred income tax liabilities
|
|
|
254,095
|
|
|
|
244,324
|
|
Other long-term liabilities
|
|
|
520,915
|
|
|
|
428,476
|
|
Commitments and contingencies (Note 12)
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
|
|
|
|
|
|
Preferred stock $0.001 par value;
10,000 shares authorized, none issued or outstanding
|
|
|
|
|
|
|
|
|
Common stock $0.001 par value;
300,000 shares authorized, 88,604 and 88,611 shares
issued and outstanding as of June 18, 2011 and
January 1, 2011, respectively
|
|
|
89
|
|
|
|
89
|
|
Additional paid-in capital
|
|
|
781,227
|
|
|
|
776,918
|
|
Retained earnings
|
|
|
153,889
|
|
|
|
71,083
|
|
Accumulated other comprehensive loss
|
|
|
(48,892
|
)
|
|
|
(55,921
|
)
|
|
|
|
|
|
|
|
|
|
Equity attributable to shareholders of Dole Food Company,
Inc.
|
|
|
886,313
|
|
|
|
792,169
|
|
Equity attributable to noncontrolling interests
|
|
|
24,660
|
|
|
|
24,615
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
910,973
|
|
|
|
816,784
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
4,409,177
|
|
|
$
|
4,256,990
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes to Condensed Consolidated Financial
Statements
5
DOLE FOOD
COMPANY, INC.
|
|
|
|
|
|
|
|
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
|
(Unaudited)
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
85,078
|
|
|
$
|
56,234
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
47,398
|
|
|
|
50,022
|
|
Share-based compensation expense
|
|
|
3,997
|
|
|
|
2,757
|
|
Net losses on financial instruments
|
|
|
37,238
|
|
|
|
8,043
|
|
Asset write-offs and net (gain) loss on sale of assets
|
|
|
4,222
|
|
|
|
(5,071
|
)
|
Earnings from equity method investments
|
|
|
(4,690
|
)
|
|
|
(4,283
|
)
|
Amortization of debt discounts and debt issuance costs
|
|
|
5,228
|
|
|
|
4,764
|
|
Provision for long-term receivables
|
|
|
|
|
|
|
1,370
|
|
Write-off of debt issuance costs
|
|
|
20
|
|
|
|
4,650
|
|
Provision for deferred income taxes
|
|
|
11,875
|
|
|
|
(632
|
)
|
Pension and other postretirement benefit plan expense
|
|
|
11,656
|
|
|
|
6,948
|
|
Other
|
|
|
35
|
|
|
|
852
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(98,222
|
)
|
|
|
(67,434
|
)
|
Inventories
|
|
|
(64,222
|
)
|
|
|
26,837
|
|
Prepaid expenses and other assets
|
|
|
(336
|
)
|
|
|
(324
|
)
|
Income taxes
|
|
|
(4,796
|
)
|
|
|
(1,829
|
)
|
Accounts payable
|
|
|
62,709
|
|
|
|
30,651
|
|
Accrued liabilities
|
|
|
(5,096
|
)
|
|
|
(3,586
|
)
|
Other long-term liabilities
|
|
|
(15,125
|
)
|
|
|
(19,006
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow provided by operating activities
|
|
|
76,969
|
|
|
|
90,963
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
Cash received from sales of assets and businesses, net of cash
disposed
|
|
|
7,996
|
|
|
|
18,784
|
|
Capital expenditures
|
|
|
(35,946
|
)
|
|
|
(31,823
|
)
|
Restricted deposits
|
|
|
45,114
|
|
|
|
(890
|
)
|
Other
|
|
|
(465
|
)
|
|
|
(515
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow provided by (used in) investing activities
|
|
|
16,699
|
|
|
|
(14,444
|
)
|
Financing Activities
|
|
|
|
|
|
|
|
|
Short-term debt repayments, net of borrowings
|
|
|
(3,310
|
)
|
|
|
(5,613
|
)
|
Long-term debt borrowings
|
|
|
163,043
|
|
|
|
923,218
|
|
Long-term debt repayments
|
|
|
(182,975
|
)
|
|
|
(906,222
|
)
|
Payment of debt issuance costs
|
|
|
|
|
|
|
(16,986
|
)
|
Payment of initial public offering costs
|
|
|
|
|
|
|
(957
|
)
|
Net proceeds from stock option exercises
|
|
|
312
|
|
|
|
|
|
Dividends paid to noncontrolling interests
|
|
|
(2,250
|
)
|
|
|
(1,268
|
)
|
Settlement of long-term Japanese yen hedge forwards
|
|
|
(2,212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow used in financing activities
|
|
|
(27,392
|
)
|
|
|
(7,828
|
)
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rate changes on cash
|
|
|
2,461
|
|
|
|
(3,015
|
)
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
|
68,737
|
|
|
|
65,676
|
|
Cash and cash equivalents at beginning of period
|
|
|
170,147
|
|
|
|
119,670
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
238,884
|
|
|
$
|
185,346
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information
At June 18, 2011 and January 1, 2011, accounts payable
included approximately $2.2 million and $18.3 million,
respectively, for capital expenditures. Of the
$18.3 million of capital expenditures included in accounts
payable at January 1, 2011, approximately
$14.2 million had been paid during the half year ended
June 18, 2011. Approximately $5.1 million had been
paid during the half year ended June 19, 2010 related to
$6.1 million of capital additions included in accounts
payable at January 2, 2010.
During the first quarter of 2011, Dole effectively extinguished
its cross currency swap liability by entering into a series of
Japanese yen forward contracts (long-term Japanese yen
hedges) that mature over a four year period. Refer to
Note 14 Derivative Financial Instruments for
additional information.
See Accompanying Notes to Condensed Consolidated Financial
Statements
6
DOLE FOOD
COMPANY, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Attributable to Shareholders of Dole Food
Company, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income (Loss)
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension &
|
|
|
|
|
|
|
|
|
Attributable
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
Cumulative
|
|
|
Unrealized
|
|
|
to
|
|
|
|
|
|
|
Shares
|
|
|
Common
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Postretirement
|
|
|
Translation
|
|
|
Gains (Losses)
|
|
|
Noncontrolling
|
|
|
Total
|
|
|
|
Outstanding
|
|
|
Stock
|
|
|
Capital
|
|
|
Earnings
|
|
|
Benefits
|
|
|
Adjustment
|
|
|
on Hedges
|
|
|
Interests
|
|
|
Equity
|
|
|
|
(In thousands)
|
|
|
|
(Unaudited)
|
|
|
Balance at January 2, 2010
|
|
|
88,233
|
|
|
$
|
88
|
|
|
$
|
768,973
|
|
|
$
|
105,207
|
|
|
$
|
(52,393
|
)
|
|
$
|
38,226
|
|
|
$
|
(21,126
|
)
|
|
$
|
27,004
|
|
|
$
|
865,979
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,760
|
|
|
|
56,234
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
2,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,757
|
|
Cancellation of restricted stock
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,268
|
)
|
|
|
(1,268
|
)
|
Net foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,715
|
)
|
|
|
|
|
|
|
(26
|
)
|
|
|
(24,741
|
)
|
Unrealized hedging gains (losses), net of income taxes of $166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,406
|
|
|
|
|
|
|
|
8,406
|
|
Reclassification of realized losses to net income, net of income
taxes of ($26)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,259
|
|
|
|
|
|
|
|
2,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 19, 2010
|
|
|
88,227
|
|
|
$
|
88
|
|
|
$
|
771,730
|
|
|
$
|
159,681
|
|
|
$
|
(52,393
|
)
|
|
$
|
13,511
|
|
|
$
|
(10,461
|
)
|
|
$
|
27,470
|
|
|
$
|
909,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2011
|
|
|
88,611
|
|
|
$
|
89
|
|
|
$
|
776,918
|
|
|
$
|
71,083
|
|
|
$
|
(71,836
|
)
|
|
$
|
42,067
|
|
|
$
|
(26,152
|
)
|
|
$
|
24,615
|
|
|
$
|
816,784
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,272
|
|
|
|
85,078
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
3,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,997
|
|
Exercise of stock options
|
|
|
27
|
|
|
|
|
|
|
|
312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
312
|
|
Issuance of restricted stock
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of restricted stock
|
|
|
(40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,250
|
)
|
|
|
(2,250
|
)
|
Net foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,503
|
|
|
|
|
|
|
|
23
|
|
|
|
7,526
|
|
Unrealized hedging gains (losses), net of income taxes of ($639)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,197
|
)
|
|
|
|
|
|
|
(14,197
|
)
|
Reclassification of realized losses to net income, net of income
taxes of $680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,723
|
|
|
|
|
|
|
|
13,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 18, 2011
|
|
|
88,604
|
|
|
$
|
89
|
|
|
$
|
781,227
|
|
|
$
|
153,889
|
|
|
$
|
(71,836
|
)
|
|
$
|
49,570
|
|
|
$
|
(26,626
|
)
|
|
$
|
24,660
|
|
|
$
|
910,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes to Condensed Consolidated Financial
Statements
7
DOLE FOOD
COMPANY, INC.
(Unaudited)
|
|
NOTE 1
|
BASIS OF
PRESENTATION
|
In the opinion of management, the accompanying unaudited
condensed consolidated financial statements of Dole Food
Company, Inc. and its consolidated subsidiaries
(Dole or the Company) include all
adjustments necessary, which are of a normal recurring nature,
to present fairly Doles financial position, results of
operations and cash flows. Dole operates under a 52/53-week
year. The quarters ended June 18, 2011 and June 19,
2010 are twelve weeks in duration. For a summary of significant
accounting policies and additional information relating to
Doles financial statements, refer to the Notes to
Consolidated Financial Statements in Item 8 of Doles
Annual Report on
Form 10-K
for the year ended January 1, 2011.
Interim results are subject to seasonal variations and are not
necessarily indicative of the results of operations for a full
year. Doles operations are sensitive to a number of
factors including weather-related phenomena and their effects on
industry volumes, prices, product quality and costs. Operations
are also sensitive to fluctuations in foreign currency exchange
rates in both sourcing and selling locations as well as economic
crises and security risks.
In March 2003, Dole completed a going-private merger
transaction. As a result of the transaction, Dole became
wholly-owned by David H. Murdock, Doles Chairman. On
October 28, 2009, Dole completed a $446 million
initial public offering (IPO) of 35,715,000 common
shares at $12.50 per share. On October 23, 2009,
Doles common stock began trading on the New York Stock
Exchange under the ticker symbol DOLE. Since the
completion of the IPO, Doles chairman, David H. Murdock,
and his affiliates have beneficially owned 51,710,000 common
shares, or approximately 58.4% of Doles outstanding common
shares.
|
|
NOTE 2
|
RECENTLY
ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS
|
During June 2011, the Financial Accounting Standards Board
(FASB) issued a standard which revised the
presentation of other comprehensive income (OCI).
The new guidance requires entities to present net income and OCI
in either a single continuous statement or in separate
consecutive statements. The guidance does not change the
components of net income or OCI, when OCI should be reclassified
to net income, or the earnings per share calculation. This
accounting guidance is effective for annual reporting periods
beginning after December 15, 2011, and is effective for
Dole beginning the first quarter of 2012. Dole adopted the
guidance early during the second quarter of 2011. The adoption
of the standard had no impact on Doles results of
operations or financial position.
8
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
NOTE 3
|
OTHER
INCOME (EXPENSE), NET
|
Included in other income (expense), net in Doles condensed
consolidated statements of operations for the quarters and half
years ended June 18, 2011 and June 19, 2010 are the
following items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
Unrealized loss on cross currency swap
|
|
$
|
|
|
|
$
|
(10,713
|
)
|
|
$
|
(3,787
|
)
|
|
$
|
(14,301
|
)
|
Realized gain on cross currency swap
|
|
|
|
|
|
|
2,291
|
|
|
|
1,885
|
|
|
|
4,547
|
|
Gain (loss) on long-term Japanese yen hedges
|
|
|
4,825
|
|
|
|
|
|
|
|
(22,580
|
)
|
|
|
|
|
Unrealized gain (loss) on foreign denominated borrowings
|
|
|
(581
|
)
|
|
|
2,058
|
|
|
|
(8,147
|
)
|
|
|
7,467
|
|
Realized gain (loss) on foreign denominated borrowings
|
|
|
(15
|
)
|
|
|
1,102
|
|
|
|
(100
|
)
|
|
|
1,102
|
|
Foreign currency exchange gain (loss) on vessel obligation
|
|
|
(130
|
)
|
|
|
(81
|
)
|
|
|
(2,539
|
)
|
|
|
5,093
|
|
Write-off of debt issuance costs
|
|
|
(20
|
)
|
|
|
|
|
|
|
(20
|
)
|
|
|
(4,650
|
)
|
Other
|
|
|
258
|
|
|
|
(153
|
)
|
|
|
274
|
|
|
|
(147
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
$
|
4,337
|
|
|
$
|
(5,496
|
)
|
|
$
|
(35,014
|
)
|
|
$
|
(889
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refer to Note 14 Derivative Financial
Instruments for further discussion regarding Doles cross
currency swap and long-term Japanese yen hedges.
Dole recorded $18.7 million of income tax expense on
$98.5 million of pretax income from continuing operations
for the half year ended June 18, 2011. Income tax expense
included an interest benefit of $2.6 million related to
Doles unrecognized tax benefits. Income tax expense of
$12.2 million on $63.5 million of pretax income from
continuing operations was recorded for the half year ended
June 19, 2010 which included interest expense of
$0.1 million related to Doles unrecognized tax
benefits. Doles effective tax rate varies significantly
from period to period due to the level, mix and seasonality of
earnings generated in its various U.S. and foreign
jurisdictions. For the periods presented, Doles income tax
expense differs from the U.S. federal statutory rate
applied to Doles pretax income primarily due to operations
in foreign jurisdictions that are taxed at a rate lower than the
U.S. federal statutory rate. Income tax expense for the
half year ended June 18, 2011 also benefitted by
$8.4 million, including tax and interest, due to a
favorable court ruling in Ecuador relating to a non-U.S
unrecognized tax benefit. Income tax expense for the half year
ended June 19, 2010 included $2.4 million recorded to
establish a valuation allowance against deferred income tax
assets in Ecuador which, as the result of a recently enacted tax
law, have been determined to be not recoverable. This was offset
by a reduction in Doles liability for unrecognized tax
benefits related to certain foreign jurisdictions.
Dole is required to adjust its effective tax rate for each
quarter to be consistent with the estimated annual effective tax
rate. Jurisdictions with a projected loss where no tax benefit
can be recognized are excluded from the calculation of the
estimated annual effective tax rate. This could result in a
higher or lower effective tax rate during a particular quarter,
based upon the mix and timing of actual earnings versus annual
projections.
Dole recognizes accrued interest and penalties related to its
unrecognized tax benefits as a component of income taxes in the
accompanying condensed consolidated statements of operations.
Accrued interest and penalties
9
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
before tax benefits were $22.7 million and
$25.3 million at June 18, 2011 and January 1,
2011, respectively. Of the $22.7 million,
$13.2 million is included in accrued liabilities as of
June 18, 2011. The remaining balances are included as a
component of other long-term liabilities in the accompanying
condensed consolidated balance sheets.
Dole Food Company, Inc. or one or more of its subsidiaries file
income tax returns in the U.S. federal jurisdiction, and
various state and foreign jurisdictions. With few exceptions,
Dole is no longer subject to U.S. federal, state and local,
or
non-U.S. income
tax examinations by tax authorities for years prior to 2001.
Income Tax Audits: Dole believes its tax
positions comply with the applicable tax laws and that it has
adequately provided for all tax related matters. Matters raised
upon audit may involve substantial amounts and could result in
material cash payments if resolved unfavorably. Management
considers it unlikely that the resolution of these matters will
have a material adverse effect on Doles results of
operations.
Dole has received an income tax assessment in Costa Rica in the
amount of approximately $43 million, including interest and
penalties, relating to the audit of the years 2006 and 2007.
Dole is challenging the assessment and believes it is without
merit. No tax liability has been provided for this matter.
Internal Revenue Service Audit: On
August 27, 2009, the IRS completed its examination of
Doles U.S. federal income tax returns for the years
2002-2005
and issued a Revenue Agents report (RAR) that
includes various proposed adjustments, including with respect to
the 2003 going-private merger transactions. The IRS proposed
that certain funding used in the going-private merger was
taxable and that some related investment banking fees were not
deductible. The net tax deficiency associated with the RAR is
$122 million, plus interest. On October 27, 2009, Dole
filed a protest letter challenging the proposed adjustments
contained in the RAR and has been pursuing resolution of these
issues with the Appeals Division of the IRS. During the quarter
ended June 18, 2011, Dole reached an agreement in principle
with the Appeals Division on all issues. As a result,
Doles total amount of unrecognized tax benefits is
expected to decrease by approximately $41 million, of which
$20 million represents a cash payment. This agreement is
expected to be finalized in the third quarter at which time the
tax of $20 million plus interest of approximately
$13 million will be paid.
|
|
NOTE 5
|
LONG-TERM
RECEIVABLES
|
At June 18, 2011, Doles long-term financing
receivables consisted of $14.8 million grower advances, net
of allowances, an $8.3 million note receivable related to
the sale of discontinued operations and net long-term trade
receivables of $3.3 million. These assets have been
included in other assets, in the accompanying condensed
consolidated balance sheet as of June 18, 2011.
Doles grower advances are generally secured by the
underlying assets of the grower, and Dole monitors the
collectability of these advances through periodic review of
financial information received from these growers. At
June 18, 2011, these advances had an allowance for credit
losses of $13 million, and approximately $7.8 million
of the net grower advances were 90 days past due.
Doles historical losses on its long-term grower advances
have been immaterial and expect this to continue. During the
first half of 2011, the provision for grower advances increased
by $2.2 million, of which $1.3 million was recorded to
cost of products sold, and the remaining $0.9 million
related to the reclassification of grower advances from
short-term to long-term.
At June 18, 2011, Dole has an $8.3 million note
receivable from the buyer of the fresh-cut flowers business. The
note receivable is secured by land and buildings that have an
estimated fair value in excess of the note which was due in
January 2011. Dole is currently renegotiating with the buyer the
terms of the note, including the timing of payment and the
interest rate. The note receivable is classified as long-term at
June 18, 2011.
Dole has long-term trade receivables of $19.1 million due
from an Eastern European customer, for which it is likely that
payment will not be received during the next year. During fiscal
2010 and 2009, Dole recorded provisions for bad debt of
$11.4 million and $4.4 million, respectively. Of the
$11.4 million, $0.8 million and $1.4 million were
recorded during the quarter and half year ended June 19,
2010, respectively. The net receivable of $3.3 million
10
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
represents managements best estimate of its net realizable
value after consideration of collateral securing the receivable.
The major classes of inventories were as follows:
|
|
|
|
|
|
|
|
|
|
|
June 18,
|
|
|
January 1,
|
|
|
|
2011
|
|
|
2011
|
|
|
|
(In thousands)
|
|
|
Finished products
|
|
$
|
430,038
|
|
|
$
|
362,799
|
|
Raw materials and work in progress
|
|
|
144,605
|
|
|
|
119,222
|
|
Crop-growing costs
|
|
|
157,487
|
|
|
|
195,010
|
|
Operating supplies and other
|
|
|
58,633
|
|
|
|
57,935
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
790,763
|
|
|
$
|
734,966
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 7
|
CHARGES
FOR RESTRUCTURING
|
As a result of continued challenging market conditions in
Doles fresh fruit operations, Dole committed to a
restructuring plan during the third quarter of 2010 in its fresh
fruit segment in Europe, Latin America and Asia. These
restructuring efforts are designed to reduce costs by realigning
fruit supply with expected demand. As part of these initiatives,
Dole restructured certain farming operations in Latin America
and Asia, reorganized its European operations and rationalized
vessel charters. As a result of these various initiatives, Dole
expects to realize cash savings in its fresh fruit segment.
These savings are expected to result from lower production costs
including lower labor costs on our farms and in our ports,
enhanced farm productivity, lower distribution costs resulting
from more efficient utilization of our shipping fleet, and lower
selling and general and administrative costs as a result of
streamlining its organization in Europe.
Dole incurred restructuring costs of $5.9 million and
$8.7 million during the quarter and half year ended
June 18, 2011, respectively. Dole has incurred cumulative
restructuring costs of $30 million since the third quarter
of 2010. Of these costs, $17.2 million were paid or will be
paid in cash, with the remaining amounts related to the non-cash
write-down of long-lived assets and deferred crop-growing costs
of $6.7 million as well as pension-related settlement
charges of $6.1 million. Severance charges relating to
employee terminations involved approximately
2,700 employees.
Dole expects to continue restructuring its fresh fruit
operations beyond the second quarter of 2011. Related to these
efforts, Dole expects to incur additional restructuring charges
of approximately $4 million during the remainder of fiscal
2011 and $0.2 million in fiscal 2012. These additional
charges will primarily consist of employee severance, contract
termination and pension-related settlement costs. Approximately
900 additional employees are expected to be impacted by these
initiatives.
11
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes restructuring charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges
|
|
|
|
|
|
|
|
|
|
|
|
|
Incurred in
|
|
|
Cumulative
|
|
|
Additional
|
|
|
|
|
|
|
Half Year
|
|
|
Charges
|
|
|
Charges to be
|
|
|
Total
|
|
|
|
2011
|
|
|
Incurred
|
|
|
Incurred
|
|
|
Charges
|
|
|
|
(In thousands)
|
|
|
Severance and other employee-related costs
|
|
$
|
1,096
|
|
|
$
|
7,764
|
|
|
$
|
1,318
|
|
|
$
|
9,082
|
|
Contract termination and other costs
|
|
|
4,978
|
|
|
|
9,436
|
|
|
|
896
|
|
|
|
10,332
|
|
Pension-related settlement charges
|
|
|
658
|
|
|
|
6,107
|
|
|
|
1,995
|
|
|
|
8,102
|
|
Asset write-downs
|
|
|
1,970
|
|
|
|
6,739
|
|
|
|
|
|
|
|
6,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,702
|
|
|
$
|
30,046
|
|
|
$
|
4,209
|
|
|
$
|
34,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A rollforward of activity for Doles restructuring
liabilities, which are classified in accrued liabilities in the
accompanying condensed consolidated balance sheets, is
summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
|
|
|
|
January 1,
|
|
|
|
|
|
|
|
|
|
|
|
June 18,
|
|
|
|
2011
|
|
|
Charges
|
|
|
Cash Payments
|
|
|
Non-cash
|
|
|
2011
|
|
|
|
(In thousands)
|
|
|
Severance and other employee-related costs
|
|
$
|
2,092
|
|
|
$
|
1,096
|
|
|
$
|
(1,616
|
)
|
|
$
|
(215
|
)
|
|
$
|
1,357
|
|
Contract termination and other costs
|
|
|
3,555
|
|
|
|
4,978
|
|
|
|
(4,709
|
)
|
|
|
|
|
|
|
3,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,647
|
|
|
$
|
6,074
|
|
|
$
|
(6,325
|
)
|
|
$
|
(215
|
)
|
|
$
|
5,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 8
|
GOODWILL
AND INTANGIBLE ASSETS
|
Goodwill has been allocated to Doles reporting segments as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresh
|
|
|
Packaged
|
|
|
|
|
|
|
Fresh Fruit
|
|
|
Vegetables
|
|
|
Foods
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Balance as of January 1, 2011 and June 18, 2011
|
|
$
|
275,430
|
|
|
$
|
71,206
|
|
|
$
|
60,611
|
|
|
$
|
407,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Details of Doles intangible assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
June 18,
|
|
|
January 1,
|
|
|
|
2011
|
|
|
2011
|
|
|
|
(In thousands)
|
|
|
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
$
|
38,501
|
|
|
$
|
38,501
|
|
Other amortized intangible assets
|
|
|
770
|
|
|
|
2,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,271
|
|
|
|
40,565
|
|
Accumulated amortization customer relationships
|
|
|
(29,301
|
)
|
|
|
(27,605
|
)
|
Other accumulated amortization
|
|
|
(308
|
)
|
|
|
(1,494
|
)
|
|
|
|
|
|
|
|
|
|
Accumulated amortization intangible assets
|
|
|
(29,609
|
)
|
|
|
(29,099
|
)
|
|
|
|
|
|
|
|
|
|
Amortized intangible assets, net
|
|
|
9,662
|
|
|
|
11,466
|
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
Trademark and trade names
|
|
|
689,615
|
|
|
|
689,615
|
|
|
|
|
|
|
|
|
|
|
Total identifiable intangible assets, net
|
|
$
|
699,277
|
|
|
$
|
701,081
|
|
|
|
|
|
|
|
|
|
|
12
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Amortization expense of intangible assets totaled
$0.8 million and $0.9 million for the quarters ended
June 18, 2011 and June 19, 2010, respectively, and
$1.7 million and $1.8 million for the half years ended
June 18, 2011 and June 19, 2010, respectively.
As of June 18, 2011, the estimated amortization expense
associated with Doles intangible assets for the remainder
of 2011 and in each of the next four fiscal years is as follows
(in thousands):
|
|
|
|
|
Fiscal Year
|
|
Amount
|
|
2011 (remainder of year)
|
|
$
|
1,981
|
|
2012
|
|
$
|
3,677
|
|
2013
|
|
$
|
1,498
|
|
2014
|
|
$
|
842
|
|
2015
|
|
$
|
842
|
|
Dole performed its annual impairment test for goodwill for all
of its reporting units during the second quarter of 2011. In
performing the valuations, Dole estimated the fair value of its
reporting units using a combination of a market approach based
on revenue and earnings before interest expense, income taxes,
depreciation and amortization multiples of comparable public
companies that are engaged in similar lines of business, and
using an income approach based on expected future cash flows
that are discounted at rates that reflect the risks associated
with the current market. In determining the estimated cash flows
for each of the reporting units, Dole considered recent economic
and industry trends in estimating the expected future cash
flows, which are subject to change based upon market conditions.
As a result of the test, Dole concluded that goodwill was not
impaired. Reasonably possible fluctuations in the market
guideline multiples, cash flow estimates, and the discount rates
used do not indicate that there is an impairment of goodwill.
In addition, Dole also performed its annual impairment test for
its
DOLE®
trademark during the second quarter of 2011. Dole estimated the
fair value of its trademark using the relief-from-royalty
method. The relief-from-royalty method estimates the royalty
expense that could be avoided in the operating business as a
result of owning the respective trademark. The royalty savings
are measured by applying a royalty rate to projected sales and
then discounting by a discount rate that reflects the risks
associated with the current market. The royalty rate is
determined based on market data. As a result of the test, Dole
concluded that the value of the trademark was not impaired. The
fair value estimate is most sensitive to the royalty rate used.
Reasonably possible changes to the royalty rate and the discount
rate do not indicate impairment for the Dole trademark.
13
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
NOTE 9
|
NOTES PAYABLE
AND LONG-TERM DEBT
|
Notes payable and long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
June 18,
|
|
|
January 1,
|
|
|
|
2011
|
|
|
2011
|
|
|
|
(In thousands)
|
|
|
Unsecured debt:
|
|
|
|
|
|
|
|
|
8.75% debentures due 2013
|
|
$
|
155,000
|
|
|
$
|
155,000
|
|
Secured debt:
|
|
|
|
|
|
|
|
|
13.875% notes due 2014
|
|
|
227,437
|
|
|
|
227,437
|
|
8% notes due 2016
|
|
|
315,000
|
|
|
|
315,000
|
|
Revolving credit facility
|
|
|
|
|
|
|
|
|
Term loan facilities
|
|
|
811,428
|
|
|
|
829,829
|
|
Contracts and notes, at a weighted-average interest rate of 3.0%
in 2011 (4.1% in 2010)
|
|
|
5,575
|
|
|
|
9,070
|
|
Capital lease obligations, at a weighted-average interest rate
of 2.6% in 2011 (2.6% in 2010)
|
|
|
60,540
|
|
|
|
59,552
|
|
Notes payable, at a weighted-average interest rate of 3.4% in
2011 (3.5% in 2010)
|
|
|
28,080
|
|
|
|
31,922
|
|
Unamortized debt discount
|
|
|
(21,931
|
)
|
|
|
(24,215
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
1,581,129
|
|
|
|
1,603,595
|
|
Current maturities, net of unamortized debt discount
|
|
|
(36,093
|
)
|
|
|
(39,270
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,545,036
|
|
|
$
|
1,564,325
|
|
|
|
|
|
|
|
|
|
|
Notes
Payable
Dole borrows funds primarily on a short-term basis to finance
current operations. The terms of these borrowings range from one
month to three months. Doles notes payable at
June 18, 2011 consist primarily of foreign borrowings in
Asia and Latin America.
Term
Loans and Revolving Credit Facility
As of June 18, 2011, the term loan facilities consisted of
$232.9 million of Term Loan B and $578.5 million of
Term Loan C. The term loan facilities bore interest, at
Doles option, at a rate per annum equal to either
(i) the London Interbank Offer Rate (LIBOR)
plus 3.25%, with a LIBOR floor of 1.75%; or (ii) a base
rate plus 2.25%. Interest on the term loan facilities was
payable quarterly in arrears. The weighted average variable
interest rate at June 18, 2011 for Term Loan B and Term
Loan C was 5.17%. The term loan facilities required quarterly
principal payments, plus a balloon payment due in 2017. During
April 2011, Dole repaid $16.3 million of the term loan
facilities due 2017. Dole had an interest rate swap to hedge
future changes in interest rates on Term Loan C which matured
June 2011. Refer to Note 14 Derivative
Financial Instruments for additional information related to this
instrument.
As of June 18, 2011, the asset-based lending senior secured
revolving credit facility (ABL revolver) borrowing
base was $289.2 million. There were no borrowings under the
ABL revolver at June 18, 2011. Amounts outstanding under
the ABL revolver bore interest, at Doles option, at a rate
per annum equal to either (i) LIBOR plus 3.00% to 3.50%, or
(ii) a base rate plus 2.00% to 2.50%, in each case, based
upon Doles historical borrowing availability under this
facility. The ABL revolver was scheduled to mature in March
2014. After taking into account approximately $87.1 million
of outstanding letters of credit issued under the ABL revolver,
Dole had approximately $202.1 million available for
borrowings as of June 18, 2011.
14
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
2011
Refinancing
Doles term loan and ABL revolver facilities were amended
on July 8, 2011. The amendments, among other things:
(i) for the ABL revolver facility, decreased the applicable
margin for LIBOR borrowings to 1.75% 2.25%, and for
base rate borrowings to 0.75% 1.25%, with the rate
at any time determined by the average historical borrowing
availability; (ii) for the term loan facilities, reduced
the LIBOR floor to 1.25% and increased the LIBOR applicable
margin to 3.75%, and the base rate applicable margin to 2.75%,
with an opportunity to reduce the applicable margin by 0.25%
after December 31, 2011 if Doles Total Leverage Ratio
is 3.50:1.00 or lower; (iii) eliminated the financial
maintenance covenants of total leverage ratio and minimum
interest coverage ratio (such covenants had been in the previous
term loan facilities, but not the revolving credit facility);
(iv) added greater operating and financial flexibility for
Dole; and (v) provided for other technical and clarifying
changes. The amended credit facilities provide $900 million
of term debt due 2018 and up to $350 million of revolving
debt due 2016.
Partial
Retirement of
137/8% Notes
due 2014
During the third quarter of 2011, Dole repurchased and retired
$38 million of the 13.875% Notes due 2014. As a result
of the repurchase, Dole will record a charge of approximately
$10 million to other income (expense) in the condensed
consolidated statement of operations during the third quarter of
2011. This charge relates to premium paid in connection with the
early debt retirement as well as the write-off of deferred debt
issuance costs and debt discounts.
Covenants
Provisions under the amended senior secured credit facilities
and the indentures governing Doles senior notes and
debentures require Dole to comply with certain covenants. These
covenants include limitations on, among other things,
indebtedness, investments, liens, loans to subsidiaries,
employees and third parties, the issuance of guarantees and the
payment of dividends. The ABL revolver also contains a
springing covenant, which would not be effective
unless the availability under the ABL revolver were to fall
below the greater of (i) $35 million and
(ii) 12.5% of the lesser of the Total Commitment (as
defined) and the borrowing base. To date, the springing covenant
has never been effective and Dole does not currently anticipate
that the springing covenant will become effective. At
June 18, 2011 Dole was in compliance with all applicable
covenants.
A breach of a covenant or other provision in any debt instrument
governing Doles current or future indebtedness could
result in a default under that instrument and, due to customary
cross-default and cross-acceleration provisions, could result in
a default under Doles other debt instruments. Upon the
occurrence of an event of default under the senior secured
credit facilities or other debt instrument, the lenders or
holders of such other debt instruments could elect to declare
all amounts outstanding to be immediately due and payable and
terminate all commitments to extend further credit. If Dole were
unable to repay those amounts, the lenders could proceed against
the collateral granted to them, if any, to secure the
indebtedness. If the lenders under Doles indebtedness were
to accelerate the payment of the indebtedness, Dole cannot give
assurance that its assets would be sufficiently liquid to repay
in full its outstanding indebtedness on an accelerated basis.
Debt
Discounts and Debt Issuance Costs
In connection with the March 2, 2010 amendments of the
senior secured credit facilities, Dole incurred debt issuance
costs of $17 million. Debt issuance costs are capitalized
and amortized into interest expense over the term of the
underlying debt. During the quarter and half year ended
June 18, 2011, Dole amortized deferred debt issuance costs
of $1.3 million and $2.8 million, respectively. During
the quarter and half year ended June 19, 2010, Dole
amortized deferred debt issuance costs of $1.4 million and
$2.6 million, respectively.
15
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Dole wrote off approximately $4.6 million of deferred debt
issuance costs during the half year ended June 19, 2010
resulting from the amendments of the senior secured credit
facilities as well as the refinancing of the term loan
facilities in connection with the amendments. The refinancing of
the term loans and a portion of the ABL revolver, as a result of
the amendments, was accounted for as extinguishment of debt. The
write-off related to these amendments was recorded in other
income (expense), net in the condensed consolidated statement of
operations for the half year ended June 19, 2010.
Debt discounts on term loan facilities in connection with the
2010 amendments of the senior secured credit facilities totaled
$8.5 million. Debt discounts are amortized into interest
expense over the term of the underlying debt. During the quarter
and half year ended June 18, 2011, Dole amortized debt
discounts of $1.1 million and $2.3 million,
respectively. During the quarter and half year ended
June 19, 2010, Dole amortized debt discounts of
$1.1 million and $2 million, respectively.
As a result of the July 8, 2011 amendment of the term loan
and ABL revolver facilities, Dole will record a charge of
approximately $13 million to other income (expense) in the
condensed consolidated statement of operations during the third
quarter of 2011. This charge relates to fees incurred in
connection with the refinancing as well as the write-off of
deferred debt issuance costs and debt discounts.
Fair
Value of Debt
Dole estimates the fair value of its secured and unsecured notes
and debentures based on current quoted market prices. The term
loans are traded between institutional investors on the
secondary loan market, and the fair values of the term loans are
based on the last available trading price. The carrying values
and estimated fair values of Doles debt are summarized
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 18, 2011
|
|
January 1, 2011
|
|
|
Carrying
|
|
Estimated
|
|
Carrying
|
|
Estimated
|
|
|
Values
|
|
Fair Values
|
|
Values
|
|
Fair Values
|
|
|
(In thousands)
|
|
Secured and unsecured notes and debentures
|
|
$
|
682,375
|
|
|
$
|
772,649
|
|
|
$
|
680,674
|
|
|
$
|
774,873
|
|
Term loans
|
|
|
804,559
|
|
|
|
810,414
|
|
|
|
822,377
|
|
|
|
844,351
|
|
Carrying values are net of debt discounts.
16
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
NOTE 10
|
EMPLOYEE
BENEFIT PLANS
|
The components of net periodic benefit cost for Doles
U.S. and international pension plans and other
postretirement benefit (OPRB) plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
U.S. Pension Plans
|
|
|
Pension Plans
|
|
|
OPRB Plans
|
|
|
|
Quarter Ended
|
|
|
Quarter Ended
|
|
|
Quarter Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
Service cost
|
|
$
|
43
|
|
|
$
|
45
|
|
|
$
|
1,459
|
|
|
$
|
1,281
|
|
|
$
|
18
|
|
|
$
|
19
|
|
Interest cost
|
|
|
3,440
|
|
|
|
3,639
|
|
|
|
1,599
|
|
|
|
1,582
|
|
|
|
482
|
|
|
|
541
|
|
Expected return on plan assets
|
|
|
(3,779
|
)
|
|
|
(3,774
|
)
|
|
|
(104
|
)
|
|
|
(103
|
)
|
|
|
|
|
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized net loss (gain)
|
|
|
1,525
|
|
|
|
888
|
|
|
|
211
|
|
|
|
108
|
|
|
|
15
|
|
|
|
(27
|
)
|
Unrecognized prior service cost (benefit)
|
|
|
|
|
|
|
|
|
|
|
97
|
|
|
|
81
|
|
|
|
(813
|
)
|
|
|
(813
|
)
|
Unrecognized net transition obligation
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
Restructuring related settlements and other
|
|
|
|
|
|
|
|
|
|
|
1,155
|
|
|
|
|
|
|
|
1,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,229
|
|
|
$
|
798
|
|
|
$
|
4,418
|
|
|
$
|
2,955
|
|
|
$
|
1,433
|
|
|
$
|
(280
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
U.S. Pension Plans
|
|
|
Pension Plans
|
|
|
OPRB Plans
|
|
|
|
Half Year Ended
|
|
|
Half Year Ended
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
Service cost
|
|
$
|
86
|
|
|
$
|
90
|
|
|
$
|
2,911
|
|
|
$
|
2,562
|
|
|
$
|
35
|
|
|
$
|
37
|
|
Interest cost
|
|
|
6,880
|
|
|
|
7,278
|
|
|
|
3,187
|
|
|
|
3,167
|
|
|
|
964
|
|
|
|
1,082
|
|
Expected return on plan assets
|
|
|
(7,558
|
)
|
|
|
(7,548
|
)
|
|
|
(207
|
)
|
|
|
(206
|
)
|
|
|
|
|
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized net loss (gain)
|
|
|
3,050
|
|
|
|
1,776
|
|
|
|
421
|
|
|
|
216
|
|
|
|
30
|
|
|
|
(54
|
)
|
Unrecognized prior service cost (benefit)
|
|
|
|
|
|
|
|
|
|
|
194
|
|
|
|
162
|
|
|
|
(1,626
|
)
|
|
|
(1,626
|
)
|
Unrecognized net transition obligation
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
Restructuring related settlements and other
|
|
|
|
|
|
|
|
|
|
|
1,557
|
|
|
|
|
|
|
|
1,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,458
|
|
|
$
|
1,596
|
|
|
$
|
8,064
|
|
|
$
|
5,913
|
|
|
$
|
1,134
|
|
|
$
|
(561
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 11
|
SEGMENT
INFORMATION
|
Dole has three reportable operating segments: fresh fruit, fresh
vegetables and packaged foods. These reportable segments are
managed separately due to differences in their products,
production processes, distribution channels and customer bases.
Management evaluates and monitors segment performance primarily
through, among other measures, earnings before interest expense
and income taxes (EBIT). EBIT before discontinued
operations is calculated from net income by adding interest
expense and income tax expense, and subtracting income from
discontinued operations, net of income taxes, and gain on
disposal of discontinued operations, net of income taxes.
Management believes that segment EBIT provides useful
information for analyzing the underlying business results as
well as allowing investors a means to evaluate the financial
results of each segment in relation to Dole as a whole. EBIT is
not defined under U.S. Generally Accepted Accounting
Principles (U.S. GAAP) and should not be
considered in
17
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
isolation or as a substitute for net income or cash flow
measures prepared in accordance with U.S. GAAP or as a
measure of Doles profitability. Additionally, Doles
computation of EBIT may not be comparable to similarly titled
measures computed by other companies, because not all companies
calculate EBIT in the same manner.
Revenues from external customers and EBIT for the reportable
operating segments and corporate were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
Revenues from external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresh fruit
|
|
$
|
1,364,778
|
|
|
$
|
1,223,438
|
|
|
$
|
2,539,444
|
|
|
$
|
2,346,401
|
|
Fresh vegetables
|
|
|
278,425
|
|
|
|
268,869
|
|
|
|
524,939
|
|
|
|
499,395
|
|
Packaged foods
|
|
|
272,341
|
|
|
|
249,061
|
|
|
|
537,121
|
|
|
|
501,304
|
|
Corporate
|
|
|
181
|
|
|
|
154
|
|
|
|
325
|
|
|
|
296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,915,725
|
|
|
$
|
1,741,522
|
|
|
$
|
3,601,829
|
|
|
$
|
3,347,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Half Year Ended
|
|
|
|
June 8,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
Fresh fruit EBIT
|
|
$
|
109,597
|
|
|
$
|
67,846
|
|
|
$
|
176,600
|
|
|
$
|
110,999
|
|
Fresh vegetables EBIT
|
|
|
3,634
|
|
|
|
7,396
|
|
|
|
14,730
|
|
|
|
17,886
|
|
Packaged foods EBIT
|
|
|
25,881
|
|
|
|
24,815
|
|
|
|
38,061
|
|
|
|
53,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating segments EBIT
|
|
|
139,112
|
|
|
|
100,057
|
|
|
|
229,391
|
|
|
|
182,714
|
|
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on cross currency swap
|
|
|
|
|
|
|
(10,713
|
)
|
|
|
(3,787
|
)
|
|
|
(14,301
|
)
|
Net gain (loss) on long-term Japanese yen hedges
|
|
|
4,825
|
|
|
|
|
|
|
|
(22,580
|
)
|
|
|
|
|
Net unrealized gain (loss) on foreign denominated instruments
|
|
|
(514
|
)
|
|
|
1,739
|
|
|
|
(6,434
|
)
|
|
|
6,465
|
|
Operating and other expenses
|
|
|
(12,403
|
)
|
|
|
(11,733
|
)
|
|
|
(23,117
|
)
|
|
|
(28,888
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
(8,092
|
)
|
|
|
(20,707
|
)
|
|
|
(55,918
|
)
|
|
|
(36,724
|
)
|
Interest expense
|
|
|
(34,837
|
)
|
|
|
(37,138
|
)
|
|
|
(70,307
|
)
|
|
|
(78,188
|
)
|
Income taxes
|
|
|
(13,518
|
)
|
|
|
(9,067
|
)
|
|
|
(18,658
|
)
|
|
|
(12,242
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
82,665
|
|
|
|
33,145
|
|
|
|
84,508
|
|
|
|
55,560
|
|
Income from discontinued operations, net of income taxes
|
|
|
29
|
|
|
|
327
|
|
|
|
231
|
|
|
|
674
|
|
Gain from disposal of discontinued operations, net of income
taxes
|
|
|
339
|
|
|
|
|
|
|
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
83,033
|
|
|
$
|
33,472
|
|
|
$
|
85,078
|
|
|
$
|
56,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Doles equity earnings from equity method investments,
which have been included in EBIT in the table above, relate
primarily to the fresh fruit operating segment.
18
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Total assets for the three reportable operating segments,
corporate and fresh-cut flowers were as follows:
|
|
|
|
|
|
|
|
|
|
|
June 18,
|
|
|
January 1,
|
|
|
|
2011
|
|
|
2011
|
|
|
|
(In thousands)
|
|
|
Total assets:
|
|
|
|
|
|
|
|
|
Fresh fruit
|
|
$
|
2,276,857
|
|
|
$
|
2,149,345
|
|
Fresh vegetables
|
|
|
379,072
|
|
|
|
403,252
|
|
Packaged foods
|
|
|
751,047
|
|
|
|
678,929
|
|
|
|
|
|
|
|
|
|
|
Total operating segments
|
|
|
3,406,976
|
|
|
|
3,231,526
|
|
Corporate
|
|
|
997,178
|
|
|
|
1,017,868
|
|
Fresh-cut flowers discontinued operation
|
|
|
5,023
|
|
|
|
7,596
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,409,177
|
|
|
$
|
4,256,990
|
|
|
|
|
|
|
|
|
|
|
Dole is a guarantor of indebtedness of some of its key fruit
suppliers and other entities integral to Doles operations.
At June 18, 2011, guarantees of $2.5 million consisted
primarily of amounts advanced under third-party bank agreements
to independent growers that supply Dole with product. In
addition, Dole had cash on deposit at June 18, 2011 of
$5.4 million securing the indebtedness of a fruit supplier.
Dole has not historically experienced any significant losses
associated with these guarantees.
Dole issues letters of credit and bank guarantees through its
ABL revolver and, in addition, separately through major banking
institutions. Dole also provides bonds issued by insurance
companies. These letters of credit, bank guarantees and
insurance company bonds are required by certain regulatory
authorities, suppliers and other operating agreements. As of
June 18, 2011, total letters of credit, bank guarantees and
bonds outstanding under these arrangements were
$179.2 million.
Dole also provides various guarantees, mostly to foreign banks,
in the course of its normal business operations to support the
borrowings, leases and other obligations of its subsidiaries.
Dole guaranteed $254.4 million of its subsidiaries
obligations to their suppliers and other third parties as of
June 18, 2011.
Dole has change of control agreements with certain key
executives, under which severance payments and benefits would
become payable in the event of specified terminations of
employment in connection with a change of control (as defined)
of Dole.
Dole is involved from time to time in claims and legal actions
incidental to its operations, both as plaintiff and defendant.
Dole has established what management currently believes to be
adequate reserves for pending legal matters. These reserves are
established as part of an ongoing worldwide assessment of claims
and legal actions that takes into consideration such items as
changes in the pending case load (including resolved and new
matters), opinions of legal counsel, individual developments in
court proceedings, changes in the law, changes in business
focus, changes in the litigation environment, changes in
opponent strategy and tactics, new developments as a result of
ongoing discovery, and past experience in defending and settling
similar claims. In the opinion of management, after consultation
with outside counsel, the claims or actions to which Dole is a
party are not expected to have a material adverse effect,
individually or in the aggregate, on Doles financial
position or results of operations.
DBCP Cases: A significant portion of
Doles legal exposure relates to lawsuits pending in the
United States and in several foreign countries, alleging injury
as a result of exposure to the agricultural chemical DBCP
(1,2-dibromo-3-chloropropane).
DBCP was manufactured by several chemical companies including
entities of The Dow Chemical Company and Royal Dutch Shell plc
and registered by the U.S. government for use on food
crops. Dole and other growers applied DBCP on banana farms in
Latin America and the Philippines and on pineapple
19
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
farms in Hawaii. Specific periods of use varied among the
different locations. Dole halted all purchases of DBCP,
including for use in foreign countries, when the U.S. EPA
cancelled the registration of DBCP for use in the United States
in 1979. That cancellation was based in part on a 1977 study by
a manufacturer which indicated an apparent link between male
sterility and exposure to DBCP among factory workers producing
the product, as well as early product testing done by the
manufacturers showing testicular effects on animals exposed to
DBCP. To date, there is no reliable evidence demonstrating that
field application of DBCP led to sterility among farm workers,
although that claim is made in the pending lawsuits. Nor is
there any reliable scientific evidence that DBCP causes any
other injuries in humans, although plaintiffs in the various
actions assert claims based on cancer, birth defects and other
general illnesses.
Currently there are 227 lawsuits, in various stages of
proceedings, alleging injury as a result of exposure to DBCP or
seeking enforcement of Nicaragua judgments. In addition, there
are 12 labor cases pending in Costa Rica under that
countrys national insurance program.
Dole has reached a tentative settlement with the plaintiff group
represented by the Provost & Umphrey Law Firm, L.L.P.,
which with full implementation will bring to an end all of their
DBCP lawsuits and judgments. Of the 227 lawsuits pending
worldwide, the tentative settlement includes five lawsuits in
the United States and 33 lawsuits in Nicaragua, which includes
any and all Nicaragua judgments and plaintiff claims associated
with Provost & Umphrey. The 33 Nicaragua cases
represent approximately $9 billion in claimed damages and,
in seven of those cases, judgments totaling $907.5 million.
Once the definitive settlement agreement is signed, the
effectiveness of the settlement will be contingent upon the
satisfaction of a number of conditions. There is no assurance,
if a definitive settlement agreement is signed, that the
settlement effectiveness conditions will be satisfied. This
tentative settlement is consistent with the position Dole has
taken in the past, that it is willing to seek reasonable
resolution of pending DBCP litigation. The tentative settlement,
if it becomes effective, will not have a material effect on
Doles financial position, results of operations or cash
flows.
Of the 189 lawsuits not included in the Provost &
Umphrey tentative settlement, 14 are currently pending in
various jurisdictions in the United States (9 cases that had
been pending in Hawaii have been dismissed, and 7 new cases have
been filed in Louisiana by the same plaintiff lawyer). One case
in Los Angeles Superior Court, the last remaining lawsuit
brought in the United States by Nicaraguan plaintiffs, was
dismissed after the Court found that the plaintiffs and their
representatives engaged in blatant fraud, witness tampering and
active manipulation. On March 11, 2011, the Court issued a
final Statement of Decision, followed on March 31, 2011 by
a Judgment, that vacates the prior judgment and dismisses all
plaintiffs claims with prejudice. Plaintiffs filed a
notice of appeal of that judgment on May 6, 2011.
The remaining lawsuits are pending in Latin America and the
Philippines. Claimed damages in DBCP cases worldwide total
approximately $45 billion ($36 billion not counting
lawsuits included in the Provost & Umphrey tentative
settlement), with lawsuits in Nicaragua representing
approximately 87% of this amount. Typically, in these cases Dole
is a joint defendant with the major DBCP manufacturers. Except
as described below, none of these lawsuits has resulted in a
verdict or judgment against Dole.
In Nicaragua, 195 cases are currently filed (of which 33 are
active) in various courts throughout the country (162 cases not
counting lawsuits included in the Provost & Umphrey
tentative settlement), all but two of which were brought
pursuant to Law 364, an October 2000 Nicaraguan statute that
contains substantive and procedural provisions that
Nicaraguas Attorney General formally opined are
unconstitutional. In October 2003, the Supreme Court of
Nicaragua issued an advisory opinion, not connected with any
litigation, that Law 364 is constitutional. Thirty-two cases
have resulted in judgments in Nicaragua (25 cases not counting
lawsuits included in the Provost & Umphrey tentative
settlement): $489.4 million (nine cases consolidated with
465 claimants) on December 11, 2002; $82.9 million
(one case with 58 claimants) on February 25, 2004;
$15.7 million (one case with 20 claimants) on May 25,
2004; $4 million (one case with four claimants) on
May 25, 2004; $56.5 million (one case with
72 claimants) on June 14, 2004; $64.8 million
(one case with 85 claimants) on June 15, 2004;
$27.7 million (one case with 36 claimants) on
March 17, 2005; $46.4 million (one case with 62
claimants) on August 20, 2005;
20
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
$38.4 million (one case with 192 claimants) on
November 14, 2007; and $357.7 million (eight cases
with 417 claimants) on January 12, 2009, which Dole learned
of unofficially. Except for the latest one, Dole has appealed
all judgments. Dole will appeal the $357.7 million judgment
once it has been served. The two judgments that resulted from
seven of the cases filed by Provost & Umphrey, the
$809 million judgment dated December 1, 2006 (six
cases consolidated with 1,248 claimants) and the
$98.5 million judgment dated August 8, 2005 (one case
with 150 claimants), are included in the tentative
settlement.
In all but one of the active cases where the proceeding has
reached the appropriate stage, Dole has sought to have the cases
returned to the United States. In all of the cases where
Doles request to return the case to the United States
has been ruled upon, the courts have denied Doles request
and Dole has appealed those decisions.
On November 10, 2009, the United States District Court for
the Southern District of Florida issued final judgment in favor
of Dole denying recognition and enforcement of the
$98.5 million Nicaragua judgment against Dole and another
U.S. company. On March 10, 2010, Plaintiffs filed an
appeal before the United States Court of Appeals for the
Eleventh Circuit. On March 25, 2011, the Eleventh Circuit
affirmed the district courts judgment, agreeing that
the Nicaraguan judgment is not due recognition and
enforcement. On April 14, 2011, Plaintiffs filed a
Petition for Rehearing En Banc before the 11th Circuit,
which was denied by the Court on June 28, 2011. This
enforcement action is included in the Provost &
Umphrey tentative settlement.
Dole believes that none of the Nicaraguan judgments will be
enforceable against any Dole entity in the U.S. or in any
other country, because Nicaraguas Law 364 is
unconstitutional and violates international principles of due
process. Among other things, Law 364 is an improper
special law directed at particular parties; it
requires defendants to pay large, non-refundable deposits in
order to even participate in the litigation; it provides a
severely truncated procedural process; it establishes an
irrebuttable presumption of causation that is contrary to the
evidence and scientific data; and it sets unreasonable minimum
damages that must be awarded in every case.
On October 23, 2006, Dole announced that its subsidiary,
Standard Fruit de Honduras, S.A., reached an agreement with the
Government of Honduras and representatives of Honduran banana
workers. This agreement establishes a Worker Program that is
intended by the parties to resolve in a fair and equitable
manner the claims of male banana workers alleging sterility as a
result of exposure to DBCP. The Honduran Worker Program will not
have a material effect on Doles financial position or
results of operations. The official start of the Honduran Worker
Program was announced on January 8, 2007. On
August 15, 2007, Shell Oil Company was included in the
Worker Program.
As to all the DBCP matters, Dole has denied liability and
asserted substantial defenses. Although no assurance can be
given concerning the outcome of the DBCP cases, in the opinion
of management, after consultation with legal counsel and based
on past experience defending and settling DBCP claims, the
pending lawsuits are not expected to have a material adverse
effect on Doles financial position or results of
operations.
European Union Antitrust Inquiry: On
October 15, 2008, the European Commission (EC)
adopted a Decision against Dole Food Company, Inc. and Dole
Fresh Fruit Europe OHG and against other unrelated banana
companies, finding violations of the European competition
(antitrust) laws. The Decision imposes 45.6 million
in fines on Dole.
The Decision follows a Statement of Objections, issued by the EC
on July 25, 2007, and searches carried out by the EC in
June 2005 at certain banana importers and distributors,
including two of Doles offices.
Dole received the Decision on October 21, 2008 and appealed
the Decision to the European General Court in Luxembourg on
December 24, 2008.
Dole made an initial $10 million (7.6 million)
provisional payment towards the 45.6 million fine on
January 22, 2009, which is classified as other assets, net
in the accompanying consolidated balance sheets. As agreed with
the European Commission (DG Budget), Dole provided the required
bank guaranty for the remaining balance of the fine plus
interest to the EC by the deadline of April 30, 2009. The
bank guaranty renews annually
21
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
during the appeals process (which may take several years) and
carries interest of 6.15% (accrued from January 23, 2009).
If the European General Court fully agrees with Doles
arguments presented in its appeal, Dole will be entitled to the
return of all monies paid, plus interest.
Although no assurances can be given, and although there could be
a material adverse effect on Dole, Dole believes that it has not
violated the European competition laws. No accrual for the
Decision has been made in the accompanying consolidated
financial statements, since Dole cannot determine at this time
the amount of probable loss, if any, incurred as a result of the
Decision.
Honduran Tax Case: In 2005, Dole received a
tax assessment from Honduras of approximately $137 million
(including the claimed tax, penalty, and interest through the
date of assessment) relating to the disposition of all of
Doles interest in Cervecería Hondureña, S.A in
2001. Dole believes the assessment is without merit and filed an
appeal with the Honduran tax authorities, which was denied. As a
result of the denial in the administrative process, in order to
negate the tax assessment, on August 5, 2005, Dole
proceeded to the next stage of the appellate process by filing a
lawsuit against the Honduran government in the Honduran
Administrative Tax Trial Court. The Honduran government sought
dismissal of the lawsuit and attachment of assets, which Dole
challenged. The Honduran Supreme Court affirmed the decision of
the Honduran intermediate appellate court that a statutory
prerequisite to challenging the tax assessment on the merits is
the payment of the tax assessment or the filing of a payment
plan with the Honduran courts; Dole has challenged the
constitutionality of the statute requiring such payment or
payment plan. Dole and the Honduran government have had
discussions regarding possible ways to resolve pending lawsuits
and tax-related matters. Although no assurance can be given
concerning the outcome of this case, in the opinion of
management, after consultation with legal counsel, the pending
lawsuits and tax-related matters are not expected to have a
material adverse effect on Doles financial position or
results of operations.
Former Shell Site: Shell Oil Company and Dole
were sued in several cases filed in Los Angeles Superior Court,
beginning in 2009, alleging property damage and personal injury
by persons claiming to be current or former residents of a
housing development built in the 1960s by a predecessor of what
is now a Dole subsidiary, on land that had been owned and used
by Shell as a crude oil storage facility for 40 years prior
to the housing development. On April 20, 2011, the Court
dismissed the case with prejudice, including all claims against
Dole. On May 2, 2011, plaintiffs filed a motion for
reconsideration with the Court, which is still pending. The
California Regional Water Quality Control Board is supervising
the cleanup on the former Shell site. On March 11, 2011,
the Water Board issued a Cleanup and Abatement Order naming
Shell as the Discharger and a Responsible Party, and ordering
Shell to assess, monitor, and cleanup and abate the effects of
contaminants discharged to soil and groundwater at the site. On
April 22, 2011, the Water Board sent Dole a letter
requiring Dole to supply information concerning ownership,
development and activities of the former Shell site.
|
|
NOTE 13
|
ASSETS
HELD-FOR-SALE
|
Dole continuously reviews its assets in order to identify those
assets that do not meet Doles future strategic direction
or internal economic return criteria. As a result of this
review, Dole has identified and is in the process of selling
specific businesses and long-lived assets. Accordingly, Dole has
reclassified these assets as
held-for-sale.
Total assets
held-for-sale
by segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresh-Cut
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flowers
|
|
|
|
|
|
|
|
|
|
Fresh
|
|
|
Packaged
|
|
|
Discontinued
|
|
|
Total Assets
|
|
|
|
Fresh Fruit
|
|
|
Vegetables
|
|
|
Foods
|
|
|
Operation
|
|
|
Held-For-Sale
|
|
|
|
(In thousands)
|
|
|
Balance as of January 1, 2011
|
|
$
|
74,641
|
|
|
$
|
599
|
|
|
$
|
3,214
|
|
|
$
|
7,596
|
|
|
$
|
86,050
|
|
Additions
|
|
|
49,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,902
|
|
Sales
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,573
|
)
|
|
|
(2,581
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 18, 2011
|
|
$
|
124,535
|
|
|
$
|
599
|
|
|
$
|
3,214
|
|
|
$
|
5,023
|
|
|
$
|
133,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Total liabilities related to assets
held-for-sale
by segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresh-Cut
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flowers
|
|
|
|
|
|
|
|
|
|
Fresh
|
|
|
Packaged
|
|
|
Discontinued
|
|
|
Total Liabilities
|
|
|
|
Fresh Fruit
|
|
|
Vegetables
|
|
|
Foods
|
|
|
Operation
|
|
|
Held-For-Sale
|
|
|
|
(In thousands)
|
|
|
Balance as of January 1, 2011
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Additions
|
|
|
22,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 18, 2011
|
|
$
|
22,098
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
22,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The major classes of assets and liabilities
held-for-sale
included in Doles condensed consolidated balance sheet at
June 18, 2011 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresh-Cut
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flowers
|
|
|
|
|
|
|
|
|
|
Fresh
|
|
|
Packaged
|
|
|
Discontinued
|
|
|
Total Assets
|
|
|
|
Fresh Fruit
|
|
|
Vegetables
|
|
|
Foods
|
|
|
Operation
|
|
|
Held-For-Sale
|
|
|
|
(In thousands)
|
|
|
Assets
held-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
$
|
32,245
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
32,245
|
|
Inventories
|
|
|
4,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,835
|
|
Prepaid expenses
|
|
|
3,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,072
|
|
Deferred income tax assets
|
|
|
2,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,506
|
|
Property, plant and equipment, net of accumulated depreciation
|
|
|
81,566
|
|
|
|
599
|
|
|
|
3,214
|
|
|
|
5,023
|
|
|
|
90,402
|
|
Intangible assets, net
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59
|
|
Other assets, net
|
|
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
held-for-sale
|
|
$
|
124,535
|
|
|
$
|
599
|
|
|
$
|
3,214
|
|
|
$
|
5,023
|
|
|
$
|
133,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresh-Cut
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flowers
|
|
|
|
|
|
|
|
|
|
Fresh
|
|
|
Packaged
|
|
|
Discontinued
|
|
|
Total Liabilities
|
|
|
|
Fresh Fruit
|
|
|
Vegetables
|
|
|
Foods
|
|
|
Operation
|
|
|
Held-For-Sale
|
|
|
|
(In thousands)
|
|
|
Liabilities related to assets
held-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
17,122
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
17,122
|
|
Current portion of long-term debt
|
|
|
865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
865
|
|
Long-term debt
|
|
|
3,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,742
|
|
Other liabilities
|
|
|
369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities related to assets
held-for-sale
|
|
$
|
22,098
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
22,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to challenges experienced in the global real estate markets,
certain assets have been classified in assets
held-for-sale
for greater than one year. Dole expects market conditions to
improve and as a result, continues to actively market these
assets and classify them as assets
held-for-sale.
23
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Gains on asset sales by segment for the quarters ended
June 18, 2011 and June 19, 2010 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from
|
|
|
|
|
|
|
|
|
Fresh
|
|
Packaged
|
|
Continuing
|
|
Discontinued
|
|
|
|
|
Fresh Fruit
|
|
Vegetables
|
|
Foods
|
|
Operations
|
|
Operations
|
|
Total
|
|
|
(In thousands)
|
|
June 18, 2011
|
|
$
|
11
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
11
|
|
|
$
|
339
|
|
|
$
|
350
|
|
June 19, 2010
|
|
$
|
950
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
950
|
|
|
$
|
|
|
|
$
|
950
|
|
Gains on asset sales by segment for the half years ended
June 18, 2011 and June 19, 2010 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from
|
|
|
|
|
|
|
|
|
Fresh
|
|
Packaged
|
|
Continuing
|
|
Discontinued
|
|
|
|
|
Fresh Fruit
|
|
Vegetables
|
|
Foods
|
|
Operations
|
|
Operations
|
|
Total
|
|
|
(In thousands)
|
|
June 18, 2011
|
|
$
|
11
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
11
|
|
|
$
|
339
|
|
|
$
|
350
|
|
June 19, 2010
|
|
$
|
2,921
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,921
|
|
|
$
|
|
|
|
$
|
2,921
|
|
Proceeds from asset sales by segment for the quarters ended
June 18, 2011 and June 19, 2010 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from
|
|
|
|
|
|
|
|
|
Fresh
|
|
Packaged
|
|
Continuing
|
|
Discontinued
|
|
|
|
|
Fresh Fruit
|
|
Vegetables
|
|
Foods
|
|
Operations
|
|
Operations
|
|
Total
|
|
|
(In thousands)
|
|
June 18, 2011
|
|
$
|
1,329
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,329
|
|
|
$
|
2,912
|
|
|
$
|
4,241
|
|
June 19, 2010
|
|
$
|
8,097
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
8,097
|
|
|
$
|
|
|
|
$
|
8,097
|
|
Proceeds from asset sales by segment for the half years ended
June 18, 2011 and June 19, 2010 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from
|
|
|
|
|
|
|
|
|
Fresh
|
|
Packaged
|
|
Continuing
|
|
Discontinued
|
|
|
|
|
Fresh Fruit
|
|
Vegetables
|
|
Foods
|
|
Operations
|
|
Operations
|
|
Total
|
|
|
(In thousands)
|
|
June 18, 2011
|
|
$
|
1,329
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,329
|
|
|
$
|
2,912
|
|
|
$
|
4,241
|
|
June 19, 2010
|
|
$
|
17,583
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
17,583
|
|
|
$
|
|
|
|
$
|
17,583
|
|
Fresh
Fruit
During the quarter ended June 18, 2011, Dole added
$49.9 million and $22.1 million to the assets
held-for-sale
and liabilities related to assets
held-for-sale
balances, respectively. These balances relate to a subsidiary in
Spain and certain assets of an Italian subsidiary, which are
both part of the European ripening and distribution business and
met the criteria to be classified as assets
held-for-sale
during the second quarter of 2011.
At June 18, 2011, the assets
held-for-sale
balance in the fresh fruit reporting segment also includes
approximately 9,300 acres of land in Hawaii. During the
second quarter of 2011, Dole sold a nominal amount of land in
Hawaii.
Packaged
Foods
At June 18, 2011, the assets
held-for-sale
balance in the packaged foods reporting segment consists
primarily of approximately 400 acres of peach orchards
located in California.
Flowers
Discontinued Operations
At June 18, 2011, the assets
held-for-sale
balance in the fresh-cut flowers discontinued
operation consists of a portion of the real estate of the former
flowers divisions. During the second quarter of 2011, Dole sold
a warehouse located in Miami, Florida to the buyer of the
flowers business. In addition, during the second quarter of 2011
Dole sold a farm in Colombia. Related to these two transactions,
Dole received cash proceeds of $2.9 million and
24
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
recorded a gain of $0.3 million, which is included as a
component of gain on disposal of discontinued operations, net of
incomes taxes in the condensed consolidated statement of
operations for the quarter and half year ended June 18,
2011.
|
|
NOTE 14
|
DERIVATIVE
FINANCIAL INSTRUMENTS
|
Dole is exposed to foreign currency exchange rate fluctuations,
bunker fuel price fluctuations and interest rate changes in the
normal course of its business. As part of its risk management
strategy, Dole uses derivative instruments to hedge some of
these exposures. Doles objective is to offset gains and
losses resulting from these exposures with gains and losses on
the derivative contracts used to hedge them, thereby reducing
volatility of earnings. Dole does not hold or issue derivative
financial instruments for trading or speculative purposes.
Cash
Flow Hedges
A majority of Doles foreign currency derivative
instruments are designated as cash flow hedges. Specifically,
Dole designated a majority of its foreign currency exchange
forward contracts and participating forward contracts as cash
flow hedges of its forecasted revenue and operating expense
transactions. As a result, changes in fair value of the foreign
currency derivative instruments since hedge designation, to the
extent effective, are recorded as a component of accumulated
other comprehensive income (loss) (AOCI) in the
condensed consolidated balance sheet and are reclassified into
earnings in the same period the underlying transactions affect
earnings. Any portion of a cash flow hedge deemed ineffective is
recognized into current period earnings.
Interest
Rate Swap, Cross Currency Swap and Long-term Japanese Yen
Hedges
Dole entered into an interest rate swap in 2006 to hedge future
changes in interest rates. This agreement effectively converted
$320 million of borrowings under Term Loan C, which was
variable-rate debt, to a fixed-rate basis, maturing
June 16, 2011.
In connection with the March 2010 refinancing transaction, some
of the terms of Doles senior secured credit facilities
were amended. Dole evaluated the impact of these amendments on
its hedge designation for its interest rate swap and determined
not to re-designate the interest rate swap as a cash flow hedge
of its interest rate risk associated with Term Loan C. As a
result, changes in the fair value of the interest rate swap
after de-designation on March 2, 2010 were recorded in
interest expense. The unrealized loss in AOCI was recognized
into interest expense through the June 2011 maturity as the
underlying Term Loan C interest payments were made.
During 2006 (subsequently amended in 2009), Dole executed a
cross currency swap to synthetically convert $320 million
of Term Loan C into Japanese yen denominated debt in order to
effectively lower the U.S. dollar fixed interest rate. The
cross currency swap was scheduled to mature in June 2011. Dole
also entered into a collateral arrangement which required Dole
to provide collateral to its counterparties when the fair market
value of the cross currency and interest rate swaps exceeded a
combined liability of $35 million.
During the first quarter of 2011, Dole entered into a
transaction to effectively unwind the cross currency swap by
refinancing its obligation under the cross currency swap and
entering into a series of long-term Japanese yen hedges that
mature through December 2014. As a result of the unwind of the
cross currency swap, the collateral arrangement with the
counterparties was no longer required and the related
$60 million of letters of credit were canceled during the
second quarter of 2011.
The long-term Japanese yen hedges require Dole to buy
U.S. Dollars and sell Japanese yen at an exchange rate of
¥101.3. At inception, these contracts were in a liability
position and the total notional amount outstanding of the
long-term Japanese yen hedges was $596.3 million. The value
of these contracts will fluctuate based on changes in the
exchange rate over the life of the individual forward contracts.
25
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In addition, Dole has designated the long-term Japanese yen
forward contracts as cash flow hedges of its forecasted Japanese
yen revenue stream, and to the extent this hedge is deemed
effective, changes in the fair value of these contracts will be
recorded as a component of AOCI in the condensed consolidated
balance sheet and reclassified into earnings in the same period
the underlying transactions affect earnings.
Due to the fact that there is a significant financing element
present at the inception of the long-term Japanese yen hedges,
the cash inflows or outflows associated with settlement of these
contracts are included within the financing activities in
Doles condensed consolidated statement of cash flows. A
portion of the long-term Japanese yen hedges are deemed
ineffective. With respect to this portion, changes in the fair
value of the hedges are recorded in other income (expense), net
in the statement of operations, because the ineffectiveness is
considered to be caused by the financing element of this
instrument.
At June 18, 2011, the gross notional value and fair value
of Doles derivative instruments were as follows:
|
|
|
|
|
|
|
|
|
|
|
Average Strike
|
|
Notional
|
|
|
Price
|
|
Amount
|
|
|
(In thousands)
|
|
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
Foreign currency hedges (buy/sell):
|
|
|
|
|
|
|
|
|
U.S. dollar/Japanese yen
|
|
|
JPY 99.70
|
|
|
$
|
707,932
|
|
U.S. dollar/Euro
|
|
|
EUR 1.39
|
|
|
|
104,251
|
|
U.S. dollar/Canadian dollar
|
|
|
CAD 1.01
|
|
|
|
15,265
|
|
Thai Baht/U.S. dollar
|
|
|
THB 32.07
|
|
|
|
53,413
|
|
Philippine Peso/U.S. dollar
|
|
|
PHP 47.27
|
|
|
|
49,050
|
|
Chilean Peso/U.S. dollar
|
|
|
CLP 502.59
|
|
|
|
4,221
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
Foreign currency hedges (buy/sell):
|
|
|
|
|
|
|
|
|
South African Rand/Euro
|
|
|
ZAR 10.19
|
|
|
|
3,012
|
|
U.S. dollar/Swedish Krona
|
|
|
SEK 6.24
|
|
|
|
1,983
|
|
Bunker fuel hedges
|
|
$
|
507
|
|
|
|
21,667
|
|
|
|
|
(per metric ton
|
)
|
|
|
(metric tons
|
)
|
26
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Assets
|
|
|
|
|
|
(Liabilities) Fair Value
|
|
|
|
Balance Sheet
|
|
June 18,
|
|
|
January 1,
|
|
|
|
Classification
|
|
2011
|
|
|
2011
|
|
|
|
|
|
(In thousands)
|
|
|
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange contracts
|
|
Receivables, net
|
|
$
|
6,615
|
|
|
$
|
16,961
|
|
|
|
Accrued liabilities
|
|
|
(44,841
|
)
|
|
|
(31,061
|
)
|
|
|
Other long-term liabilities
|
|
|
(135,880
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives designated as cash flow hedging instruments
|
|
|
|
|
(174,106
|
)
|
|
|
(14,100
|
)
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange contracts
|
|
Receivables, net
|
|
|
87
|
|
|
|
908
|
|
|
|
Accrued liabilities
|
|
|
(1,330
|
)
|
|
|
|
|
Cross currency swap
|
|
Receivables, net
|
|
|
|
|
|
|
1,584
|
|
|
|
Accrued liabilities
|
|
|
|
|
|
|
(130,380
|
)
|
Interest rate swap
|
|
Accrued liabilities
|
|
|
|
|
|
|
(11,310
|
)
|
Bunker fuel hedges
|
|
Receivables, net
|
|
|
1,947
|
|
|
|
1,587
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
|
704
|
|
|
|
(137,611
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
(173,402
|
)
|
|
$
|
(151,711
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Settlement of the foreign currency hedges will occur during 2011
through 2014 and settlement of bunker fuel hedges will occur
during 2011 and 2012.
The effects of the interest rate swap and foreign currency
hedges designated as cash flow hedging instruments on
accumulated other comprehensive income (loss) and the condensed
consolidated statements of operations for the quarters and half
years ended June 18, 2011 and June 19, 2010 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (Losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized in
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
Due to Hedge
|
|
|
|
|
|
|
|
|
|
|
Ineffectiveness
|
|
|
|
|
|
|
|
|
|
|
or Amounts
|
|
|
Gains (Losses)
|
|
|
|
Gains (Losses)
|
|
Excluded
|
|
|
Recognized in
|
|
|
|
Reclassified
|
|
from Effectiveness
|
|
|
AOCI During
|
|
|
|
Into Income
|
|
Testing
|
|
|
Quarter Ended
|
|
|
|
Quarter Ended
|
|
Quarter Ended
|
|
|
June 18,
|
|
June 19,
|
|
Income Statement
|
|
June 18,
|
|
June 19,
|
|
June 18,
|
|
June 19,
|
|
|
2011
|
|
2010
|
|
Classification
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(In thousands)
|
|
Interest rate swap
|
|
$
|
|
|
|
$
|
|
|
|
Interest expense
|
|
$
|
(3,185
|
)
|
|
$
|
(3,883
|
)
|
|
$
|
|
|
|
$
|
|
|
Foreign currency hedges(1)
|
|
|
(13,247
|
)
|
|
|
(382
|
)
|
|
Cost of products sold
|
|
|
(5,184
|
)
|
|
|
2,755
|
|
|
|
(2,426
|
)
|
|
|
(166
|
)
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
|
|
|
|
|
|
|
|
|
4,825
|
|
|
|
|
|
27
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (Losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized in
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
Due to Hedge
|
|
|
|
|
|
|
|
|
|
|
Ineffectiveness
|
|
|
|
|
|
|
|
|
|
|
or Amounts
|
|
|
Gains (Losses)
|
|
|
|
Gains (Losses)
|
|
Excluded
|
|
|
Recognized in
|
|
|
|
Reclassified
|
|
from Effectiveness
|
|
|
AOCI During
|
|
|
|
Into Income
|
|
Testing
|
|
|
Half Year Ended
|
|
|
|
Half Year Ended
|
|
Half Year Ended
|
|
|
June 18,
|
|
June 19,
|
|
Income Statement
|
|
June 18,
|
|
June 19,
|
|
June 18,
|
|
June 19,
|
|
|
2011
|
|
2010
|
|
Classification
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(In thousands)
|
|
Interest rate swap
|
|
$
|
|
|
|
$
|
680
|
|
|
Interest expense
|
|
$
|
(6,644
|
)
|
|
$
|
(5,040
|
)
|
|
$
|
|
|
|
$
|
|
|
Foreign currency hedges(1)
|
|
|
(14,908
|
)
|
|
|
7,560
|
|
|
Cost of products sold
|
|
|
(6,399
|
)
|
|
|
2,755
|
|
|
|
(790
|
)
|
|
|
(268
|
)
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
|
|
|
|
|
|
|
|
|
4,143
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts related to the long-term Japanese yen hedges have been
included in this line item. |
Unrealized gains and losses on the interest rate swap were
recorded through AOCI through the de-designation date. Amounts
included in AOCI as of the de-designation date were amortized
into interest expense as the quarterly payments were made,
through maturity of the interest rate swap in June 2011.
Unrecognized losses of $19.9 million related to the foreign
currency hedges are expected to be realized into earnings in the
next twelve months.
Net gains (losses) on derivatives not designated or prior to
being designated as hedging instruments for the quarters and
half years ended June 18, 2011 and June 19, 2010 were
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Income Statement
|
|
June 18,
|
|
|
June 19,
|
|
|
|
Classification
|
|
2011
|
|
|
2010
|
|
|
|
|
|
(In thousands)
|
|
|
Foreign currency exchange contracts
|
|
Cost of products sold
|
|
$
|
(605
|
)
|
|
$
|
(121
|
)
|
Bunker fuel contracts
|
|
Cost of products sold
|
|
|
239
|
|
|
|
(633
|
)
|
Cross currency swap
|
|
Other income (expense), net
|
|
|
|
|
|
|
(8,422
|
)
|
Interest rate swap
|
|
Interest expense
|
|
|
(10,889
|
)
|
|
|
(561
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
(11,255
|
)
|
|
$
|
(9,737
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Half Year Ended
|
|
|
|
Income Statement
|
|
June 18,
|
|
|
June 19,
|
|
|
|
Classification
|
|
2011
|
|
|
2010
|
|
|
|
|
|
(In thousands)
|
|
|
Foreign currency exchange contracts
|
|
Cost of products sold
|
|
$
|
(858
|
)
|
|
$
|
(87
|
)
|
Bunker fuel contracts
|
|
Cost of products sold
|
|
|
2,812
|
|
|
|
(722
|
)
|
Cross currency swap
|
|
Other income (expense), net
|
|
|
(1,902
|
)
|
|
|
(9,754
|
)
|
Long-term Japanese yen hedges(1)
|
|
Other income (expense), net
|
|
|
(26,723
|
)
|
|
|
|
|
Interest rate swap
|
|
Interest expense
|
|
|
(18,942
|
)
|
|
|
559
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
(45,613
|
)
|
|
$
|
(10,004
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Prior to being designated as cash flow hedges, Dole recorded a
$26.7 million unrealized loss on the long-term Japanese yen
hedges. |
28
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
NOTE 15
|
FAIR
VALUE MEASUREMENTS
|
Doles financial instruments primarily consist of
short-term trade and grower receivables, trade payables, notes
receivable and notes payable, as well as long-term grower
receivables, capital lease obligations, term loans, a revolving
loan, and notes and debentures. For short-term instruments, the
carrying amount approximates fair value because of the short
maturity of these instruments. For the long-term financial
instruments, excluding Doles secured notes and unsecured
debentures, and term and revolving loans, the carrying amount
approximates fair value since they bear interest at variable
rates or fixed rates which approximate market.
The inputs used to measure fair value are based on a hierarchy
that prioritizes observable and unobservable inputs used in
valuation techniques. These levels, in order of highest to
lowest priority are described below:
Level 1: Quoted prices (unadjusted) in
active markets that are accessible at the measurement date for
identical assets or liabilities.
Level 2: Observable prices that are based
on inputs not quoted on active markets, but corroborated by
market data.
Level 3: Unobservable inputs that are not
corroborated by market data.
The following table provides a summary of the assets and
liabilities measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 18, 2011
|
|
|
January 1, 2011
|
|
|
|
|
|
|
Fair Value
|
|
|
|
|
|
Fair Value
|
|
|
|
|
|
|
Measurements Using
|
|
|
|
|
|
Measurements Using
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
Other Observable
|
|
|
|
|
|
Other Observable
|
|
|
|
|
|
|
Inputs
|
|
|
|
|
|
Inputs
|
|
|
|
Total
|
|
|
(Level 2)
|
|
|
Total
|
|
|
(Level 2)
|
|
|
|
(In thousands)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange contracts
|
|
$
|
6,702
|
|
|
$
|
6,702
|
|
|
$
|
17,869
|
|
|
$
|
17,869
|
|
Bunker fuel contracts
|
|
|
1,947
|
|
|
|
1,947
|
|
|
|
1,587
|
|
|
|
1,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,649
|
|
|
$
|
8,649
|
|
|
$
|
19,456
|
|
|
$
|
19,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange contracts
|
|
$
|
182,051
|
|
|
$
|
182,051
|
|
|
$
|
31,061
|
|
|
$
|
31,061
|
|
Interest rate swap
|
|
|
|
|
|
|
|
|
|
|
11,310
|
|
|
|
11,310
|
|
Cross currency swap, net
|
|
|
|
|
|
|
|
|
|
|
128,796
|
|
|
|
128,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
182,051
|
|
|
$
|
182,051
|
|
|
$
|
171,167
|
|
|
$
|
171,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Dole, the assets and liabilities that are required to be
recorded at fair value on a recurring basis are the derivative
instruments. The fair values of Doles derivative
instruments are determined using Level 2 inputs, which are
defined as significant other observable inputs. The
fair values of the foreign currency exchange contracts, bunker
fuel contracts, interest rate swap and cross currency swap were
estimated using internal discounted cash flow calculations based
upon forward foreign currency exchange rates, bunker fuel
futures, interest-rate yield curves or quotes obtained from
brokers for contracts with similar terms, less any credit
valuation adjustments. Dole recorded a credit valuation
adjustment at June 18, 2011 which reduced the derivative
liability balances. The credit valuation adjustment was
$6.5 million at June 18, 2011 and $0.5 million at
January 1, 2011. For the half year ended June 18,
2011, the net change in credit valuation adjustment resulted in
an unrealized gain of $6 million, which was recorded as
other income (expense), net. For the half year ended
June 19, 2010, the net change in the credit valuation
adjustment resulted in a loss of $1.2 million. Of this
loss, $0.4 million was recorded as interest expense and
$0.8 million was recorded as other income (expense), net.
For the quarter ended June 18, 2011, the net change in the
credit valuation adjustment resulted in a loss (income) of
$1.8 million, which was recorded as other income
29
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(expense), net. For the quarter ended June 19, 2010, the
net change in the credit valuation adjustment resulted in a loss
of $0.2 million. Of this loss, $0.1 million was
recorded as interest expense and $0.1 million was recorded
as other income (expense), net.
In addition to assets and liabilities that are recorded at fair
value on a recurring basis, Dole is required to record assets
and liabilities at fair value on a nonrecurring basis.
Nonfinancial assets such as goodwill, indefinite-lived
intangible assets and long-lived assets are measured on an
annual basis during the second quarter, or as indicators of
impairment arise and recorded at fair value only when an
impairment is recognized.
The goodwill and indefinite-lived intangible asset impairment
analysis was performed in the second quarter of 2011 using a
combination of discounted cash flow models and market multiples.
The discounted cash flow models used estimates and assumptions
including pricing and volume data, anticipated growth rates,
profitability levels, tax rates and discount rates.
Credit
Risk
The counterparties to the foreign currency and bunker fuel
forward contracts and the interest rate and cross currency swaps
consist of a number of major international financial
institutions. Dole has established counterparty guidelines and
regularly monitors its positions and the financial strength of
these institutions. While counterparties to hedging contracts
expose Dole to credit-related losses in the event of a
counterpartys non-performance, the risk would be limited
to the unrealized gains on such affected contracts. Dole does
not anticipate any such losses.
30
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
NOTE 16
|
EARNINGS
PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands, except per share data)
|
|
|
Income from continuing operations
|
|
$
|
82,665
|
|
|
$
|
33,145
|
|
|
$
|
84,508
|
|
|
$
|
55,560
|
|
Income (loss) from discontinued operations, net of income taxes
|
|
|
29
|
|
|
|
327
|
|
|
|
231
|
|
|
|
674
|
|
Gain on disposal of discontinued operations, net of taxes
|
|
|
339
|
|
|
|
|
|
|
|
339
|
|
|
|
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
(1,267
|
)
|
|
|
(1,151
|
)
|
|
|
(2,272
|
)
|
|
|
(1,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
$
|
81,766
|
|
|
$
|
32,321
|
|
|
$
|
82,806
|
|
|
$
|
54,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding Basic
|
|
|
87,587
|
|
|
|
87,425
|
|
|
|
87,580
|
|
|
|
87,425
|
|
Diluted effects of stock incentive plan
|
|
|
535
|
|
|
|
19
|
|
|
|
522
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding Diluted
|
|
|
88,122
|
|
|
|
87,444
|
|
|
|
88,102
|
|
|
|
87,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.94
|
|
|
$
|
0.38
|
|
|
$
|
0.96
|
|
|
$
|
0.64
|
|
Income from discontinued operations, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of discontinued operations, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
$
|
0.93
|
|
|
$
|
0.37
|
|
|
$
|
0.95
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.94
|
|
|
$
|
0.38
|
|
|
$
|
0.96
|
|
|
$
|
0.64
|
|
Income from discontinued operations, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of discontinued operations, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
$
|
0.93
|
|
|
$
|
0.37
|
|
|
$
|
0.94
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 17
|
GUARANTOR
FINANCIAL INFORMATION
|
Doles 100% owned domestic subsidiaries
(Guarantors) have fully and unconditionally
guaranteed, on a joint and several basis, Doles
obligations under the indentures related to Doles
8.75% debentures due 2013, the 13.875% senior secured
notes due 2014 and the 8% senior secured notes due 2016.
Each guarantee is subordinated in right of payment to the
Guarantors existing and future senior debt, including
obligations under the senior secured credit facilities, and will
rank pari passu with all senior subordinated indebtedness of the
applicable Guarantor.
The accompanying Guarantor consolidating financial information
is presented on the equity method of accounting for all periods
presented. Under this method, investments in subsidiaries are
recorded at cost and adjusted for subsidiaries cumulative
results of operations, capital contributions and distributions
and other changes in equity. Elimination entries relate to the
elimination of investments in subsidiaries and associated
intercompany balances and transactions as well as cash overdraft
and income tax reclassifications.
The following are condensed consolidating statements of
operations of Dole for the quarters and half years ended
June 18, 2011 and June 19, 2010; condensed
consolidating balance sheets as of June 18, 2011 and
January 1, 2011; and condensed consolidating statements of
cash flows for the half years ended June 18, 2011 and
June 19, 2010.
31
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended June 18, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dole Food
|
|
|
|
|
|
Non
|
|
|
|
|
|
|
|
|
|
Company, Inc.
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Revenues, net
|
|
$
|
24,277
|
|
|
$
|
789,054
|
|
|
$
|
1,507,761
|
|
|
$
|
(405,367
|
)
|
|
$
|
1,915,725
|
|
Cost of products sold
|
|
|
(18,986
|
)
|
|
|
(702,800
|
)
|
|
|
(1,338,044
|
)
|
|
|
402,311
|
|
|
|
(1,657,519
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
5,291
|
|
|
|
86,254
|
|
|
|
169,717
|
|
|
|
(3,056
|
)
|
|
|
258,206
|
|
Selling, marketing and general and administrative expenses
|
|
|
(13,828
|
)
|
|
|
(57,457
|
)
|
|
|
(62,004
|
)
|
|
|
3,056
|
|
|
|
(130,233
|
)
|
Charges for restructuring and
long-term
receivables
|
|
|
|
|
|
|
|
|
|
|
(5,947
|
)
|
|
|
|
|
|
|
(5,947
|
)
|
Gain on asset sales
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(8,526
|
)
|
|
|
28,797
|
|
|
|
101,766
|
|
|
|
|
|
|
|
122,037
|
|
Equity in subsidiary income
|
|
|
104,238
|
|
|
|
79,850
|
|
|
|
|
|
|
|
(184,088
|
)
|
|
|
|
|
Other income (expense), net
|
|
|
(6
|
)
|
|
|
|
|
|
|
4,343
|
|
|
|
|
|
|
|
4,337
|
|
Interest income
|
|
|
230
|
|
|
|
156
|
|
|
|
780
|
|
|
|
|
|
|
|
1,166
|
|
Interest expense
|
|
|
(22,702
|
)
|
|
|
(19
|
)
|
|
|
(12,116
|
)
|
|
|
|
|
|
|
(34,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes and equity
earnings
|
|
|
73,234
|
|
|
|
108,784
|
|
|
|
94,773
|
|
|
|
(184,088
|
)
|
|
|
92,703
|
|
Income taxes
|
|
|
8,532
|
|
|
|
(4,684
|
)
|
|
|
(17,366
|
)
|
|
|
|
|
|
|
(13,518
|
)
|
Earnings from equity method investments
|
|
|
|
|
|
|
67
|
|
|
|
3,413
|
|
|
|
|
|
|
|
3,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
81,766
|
|
|
|
104,167
|
|
|
|
80,820
|
|
|
|
(184,088
|
)
|
|
|
82,665
|
|
Income from discontinued operations, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
29
|
|
Gain on disposal of discontinued operations, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
339
|
|
|
|
|
|
|
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
81,766
|
|
|
|
104,167
|
|
|
|
81,188
|
|
|
|
(184,088
|
)
|
|
|
83,033
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(1,267
|
)
|
|
|
|
|
|
|
(1,267
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
$
|
81,766
|
|
|
$
|
104,167
|
|
|
$
|
79,921
|
|
|
$
|
(184,088
|
)
|
|
$
|
81,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended June 19, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dole Food
|
|
|
|
|
|
Non
|
|
|
|
|
|
|
|
|
|
Company, Inc.
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Revenues, net
|
|
$
|
21,627
|
|
|
$
|
750,192
|
|
|
$
|
1,323,716
|
|
|
$
|
(354,013
|
)
|
|
$
|
1,741,522
|
|
Cost of products sold
|
|
|
(18,681
|
)
|
|
|
(664,831
|
)
|
|
|
(1,208,100
|
)
|
|
|
350,890
|
|
|
|
(1,540,722
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
2,946
|
|
|
|
85,361
|
|
|
|
115,616
|
|
|
|
(3,123
|
)
|
|
|
200,800
|
|
Selling, marketing and general and administrative expenses
|
|
|
(16,303
|
)
|
|
|
(50,330
|
)
|
|
|
(56,980
|
)
|
|
|
3,123
|
|
|
|
(120,490
|
)
|
Charges for restructuring and long-term receivables
|
|
|
|
|
|
|
|
|
|
|
(762
|
)
|
|
|
|
|
|
|
(762
|
)
|
Gain on asset sales
|
|
|
154
|
|
|
|
|
|
|
|
796
|
|
|
|
|
|
|
|
950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(13,203
|
)
|
|
|
35,031
|
|
|
|
58,670
|
|
|
|
|
|
|
|
80,498
|
|
Equity in subsidiary income
|
|
|
63,666
|
|
|
|
33,984
|
|
|
|
|
|
|
|
(97,650
|
)
|
|
|
|
|
Other income (expense), net
|
|
|
(396
|
)
|
|
|
|
|
|
|
(5,100
|
)
|
|
|
|
|
|
|
(5,496
|
)
|
Interest income
|
|
|
292
|
|
|
|
59
|
|
|
|
1,165
|
|
|
|
|
|
|
|
1,516
|
|
Interest expense
|
|
|
(22,770
|
)
|
|
|
(26
|
)
|
|
|
(14,342
|
)
|
|
|
|
|
|
|
(37,138
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes and equity
earnings
|
|
|
27,589
|
|
|
|
69,048
|
|
|
|
40,393
|
|
|
|
(97,650
|
)
|
|
|
39,380
|
|
Income taxes
|
|
|
4,732
|
|
|
|
(5,856
|
)
|
|
|
(7,943
|
)
|
|
|
|
|
|
|
(9,067
|
)
|
Earnings from equity method investments
|
|
|
|
|
|
|
42
|
|
|
|
2,790
|
|
|
|
|
|
|
|
2,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
32,321
|
|
|
|
63,234
|
|
|
|
35,240
|
|
|
|
(97,650
|
)
|
|
|
33,145
|
|
Income from discontinued operations, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
327
|
|
|
|
|
|
|
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
32,321
|
|
|
|
63,234
|
|
|
|
35,567
|
|
|
|
(97,650
|
)
|
|
|
33,472
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(1,151
|
)
|
|
|
|
|
|
|
(1,151
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
$
|
32,321
|
|
|
$
|
63,234
|
|
|
$
|
34,416
|
|
|
$
|
(97,650
|
)
|
|
$
|
32,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS
For the Half Year Ended June 18,
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dole Food
|
|
|
|
|
|
Non
|
|
|
|
|
|
|
|
|
|
Company, Inc.
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Revenues, net
|
|
$
|
46,469
|
|
|
$
|
1,550,939
|
|
|
$
|
2,778,548
|
|
|
$
|
(774,127
|
)
|
|
$
|
3,601,829
|
|
Cost of products sold
|
|
|
(36,624
|
)
|
|
|
(1,375,757
|
)
|
|
|
(2,492,284
|
)
|
|
|
767,803
|
|
|
|
(3,136,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
9,845
|
|
|
|
175,182
|
|
|
|
286,264
|
|
|
|
(6,324
|
)
|
|
|
464,967
|
|
Selling, marketing and general and administrative expenses
|
|
|
(26,671
|
)
|
|
|
(117,705
|
)
|
|
|
(116,911
|
)
|
|
|
6,324
|
|
|
|
(254,963
|
)
|
Charges for restructuring and long-term receivables
|
|
|
|
|
|
|
|
|
|
|
(8,702
|
)
|
|
|
|
|
|
|
(8,702
|
)
|
Gain on asset sales
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(16,815
|
)
|
|
|
57,477
|
|
|
|
160,651
|
|
|
|
|
|
|
|
201,313
|
|
Equity in subsidiary income
|
|
|
133,778
|
|
|
|
84,313
|
|
|
|
|
|
|
|
(218,091
|
)
|
|
|
|
|
Other income (expense), net
|
|
|
(6
|
)
|
|
|
|
|
|
|
(35,008
|
)
|
|
|
|
|
|
|
(35,014
|
)
|
Interest income
|
|
|
480
|
|
|
|
403
|
|
|
|
1,601
|
|
|
|
|
|
|
|
2,484
|
|
Interest expense
|
|
|
(45,498
|
)
|
|
|
(41
|
)
|
|
|
(24,768
|
)
|
|
|
|
|
|
|
(70,307
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes and
equity earnings
|
|
|
71,939
|
|
|
|
142,152
|
|
|
|
102,476
|
|
|
|
(218,091
|
)
|
|
|
98,476
|
|
Income taxes
|
|
|
10,867
|
|
|
|
(9,111
|
)
|
|
|
(20,414
|
)
|
|
|
|
|
|
|
(18,658
|
)
|
Earnings from equity method investments
|
|
|
|
|
|
|
292
|
|
|
|
4,398
|
|
|
|
|
|
|
|
4,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
82,806
|
|
|
|
133,333
|
|
|
|
86,460
|
|
|
|
(218,091
|
)
|
|
|
84,508
|
|
Income from discontinued operations, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
231
|
|
|
|
|
|
|
|
231
|
|
Gain on disposal of discontinued operations, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
339
|
|
|
|
|
|
|
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
82,806
|
|
|
|
133,333
|
|
|
|
87,030
|
|
|
|
(218,091
|
)
|
|
|
85,078
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(2,272
|
)
|
|
|
|
|
|
|
(2,272
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
$
|
82,806
|
|
|
$
|
133,333
|
|
|
$
|
84,758
|
|
|
$
|
(218,091
|
)
|
|
$
|
82,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS
For the Half Year Ended June 19,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dole Food
|
|
|
|
|
|
Non
|
|
|
|
|
|
|
|
|
|
Company, Inc.
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Revenues, net
|
|
$
|
40,123
|
|
|
$
|
1,480,471
|
|
|
$
|
2,512,088
|
|
|
$
|
(685,286
|
)
|
|
$
|
3,347,396
|
|
Cost of products sold
|
|
|
(33,470
|
)
|
|
|
(1,298,045
|
)
|
|
|
(2,322,113
|
)
|
|
|
679,239
|
|
|
|
(2,974,389
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
6,653
|
|
|
|
182,426
|
|
|
|
189,975
|
|
|
|
(6,047
|
)
|
|
|
373,007
|
|
Selling, marketing and general and administrative expenses
|
|
|
(33,188
|
)
|
|
|
(100,574
|
)
|
|
|
(107,365
|
)
|
|
|
6,047
|
|
|
|
(235,080
|
)
|
Charges for restructuring and long-term receivables
|
|
|
|
|
|
|
|
|
|
|
(1,370
|
)
|
|
|
|
|
|
|
(1,370
|
)
|
Gain on asset sales
|
|
|
580
|
|
|
|
|
|
|
|
2,341
|
|
|
|
|
|
|
|
2,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(25,955
|
)
|
|
|
81,852
|
|
|
|
83,581
|
|
|
|
|
|
|
|
139,478
|
|
Equity in subsidiary income
|
|
|
116,060
|
|
|
|
44,365
|
|
|
|
|
|
|
|
(160,425
|
)
|
|
|
|
|
Other income (expense), net
|
|
|
(1,825
|
)
|
|
|
|
|
|
|
936
|
|
|
|
|
|
|
|
(889
|
)
|
Interest income
|
|
|
565
|
|
|
|
178
|
|
|
|
2,375
|
|
|
|
|
|
|
|
3,118
|
|
Interest expense
|
|
|
(47,608
|
)
|
|
|
(53
|
)
|
|
|
(30,527
|
)
|
|
|
|
|
|
|
(78,188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes and equity
earnings
|
|
|
41,237
|
|
|
|
126,342
|
|
|
|
56,365
|
|
|
|
(160,425
|
)
|
|
|
63,519
|
|
Income taxes
|
|
|
13,237
|
|
|
|
(11,383
|
)
|
|
|
(14,096
|
)
|
|
|
|
|
|
|
(12,242
|
)
|
Earnings from equity method investments
|
|
|
|
|
|
|
337
|
|
|
|
3,946
|
|
|
|
|
|
|
|
4,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
54,474
|
|
|
|
115,296
|
|
|
|
46,215
|
|
|
|
(160,425
|
)
|
|
|
55,560
|
|
Income from discontinued operations, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
674
|
|
|
|
|
|
|
|
674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
54,474
|
|
|
|
115,296
|
|
|
|
46,889
|
|
|
|
(160,425
|
)
|
|
|
56,234
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(1,760
|
)
|
|
|
|
|
|
|
(1,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
$
|
54,474
|
|
|
$
|
115,296
|
|
|
$
|
45,129
|
|
|
$
|
(160,425
|
)
|
|
$
|
54,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING BALANCE SHEET
As of June 18, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dole Food
|
|
|
|
|
|
Non
|
|
|
|
|
|
|
|
|
|
Company, Inc.
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
ASSETS
|
Cash and cash equivalents
|
|
$
|
101,666
|
|
|
$
|
1,605
|
|
|
$
|
135,613
|
|
|
$
|
|
|
|
$
|
238,884
|
|
Restricted cash and deposits
|
|
|
|
|
|
|
|
|
|
|
5,994
|
|
|
|
|
|
|
|
5,994
|
|
Receivables, net of allowances
|
|
|
566,347
|
|
|
|
132,039
|
|
|
|
556,015
|
|
|
|
(444,759
|
)
|
|
|
809,642
|
|
Inventories
|
|
|
6,952
|
|
|
|
289,843
|
|
|
|
493,968
|
|
|
|
|
|
|
|
790,763
|
|
Prepaid expenses and other assets
|
|
|
7,841
|
|
|
|
9,936
|
|
|
|
47,392
|
|
|
|
|
|
|
|
65,169
|
|
Deferred income tax assets
|
|
|
9,494
|
|
|
|
27,505
|
|
|
|
3,362
|
|
|
|
|
|
|
|
40,361
|
|
Assets
held-for-sale
|
|
|
74,452
|
|
|
|
3,813
|
|
|
|
55,106
|
|
|
|
|
|
|
|
133,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
766,752
|
|
|
|
464,741
|
|
|
|
1,297,450
|
|
|
|
(444,759
|
)
|
|
|
2,084,184
|
|
Investments
|
|
|
2,546,717
|
|
|
|
1,906,042
|
|
|
|
96,648
|
|
|
|
(4,452,593
|
)
|
|
|
96,814
|
|
Property, plant and equipment, net
|
|
|
155,291
|
|
|
|
271,803
|
|
|
|
485,841
|
|
|
|
|
|
|
|
912,935
|
|
Goodwill
|
|
|
|
|
|
|
131,818
|
|
|
|
275,429
|
|
|
|
|
|
|
|
407,247
|
|
Intangible assets, net
|
|
|
689,615
|
|
|
|
9,325
|
|
|
|
337
|
|
|
|
|
|
|
|
699,277
|
|
Other assets, net
|
|
|
68,336
|
|
|
|
8,675
|
|
|
|
131,709
|
|
|
|
|
|
|
|
208,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,226,711
|
|
|
$
|
2,792,404
|
|
|
$
|
2,287,414
|
|
|
$
|
(4,897,352
|
)
|
|
$
|
4,409,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
Accounts payable
|
|
$
|
5,670
|
|
|
$
|
597,196
|
|
|
$
|
404,683
|
|
|
$
|
(444,759
|
)
|
|
$
|
562,790
|
|
Liabilities related to assets
held-for-sale
|
|
|
|
|
|
|
|
|
|
|
22,098
|
|
|
|
|
|
|
|
22,098
|
|
Accrued liabilities
|
|
|
99,487
|
|
|
|
194,652
|
|
|
|
263,038
|
|
|
|
|
|
|
|
557,177
|
|
Current portion of long-term debt, net
|
|
|
(1,691
|
)
|
|
|
295
|
|
|
|
9,409
|
|
|
|
|
|
|
|
8,013
|
|
Notes payable
|
|
|
|
|
|
|
|
|
|
|
28,080
|
|
|
|
|
|
|
|
28,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
103,466
|
|
|
|
792,143
|
|
|
|
727,308
|
|
|
|
(444,759
|
)
|
|
|
1,178,158
|
|
Intercompany payables (receivables)
|
|
|
1,839,849
|
|
|
|
(568,740
|
)
|
|
|
(1,271,109
|
)
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
914,967
|
|
|
|
2,760
|
|
|
|
627,309
|
|
|
|
|
|
|
|
1,545,036
|
|
Deferred income tax liabilities
|
|
|
219,884
|
|
|
|
599
|
|
|
|
33,612
|
|
|
|
|
|
|
|
254,095
|
|
Other long-term liabilities
|
|
|
262,232
|
|
|
|
19,806
|
|
|
|
238,877
|
|
|
|
|
|
|
|
520,915
|
|
Equity attributable to shareholders of Dole Food Company,
Inc.
|
|
|
886,313
|
|
|
|
2,545,836
|
|
|
|
1,906,757
|
|
|
|
(4,452,593
|
)
|
|
|
886,313
|
|
Equity attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
24,660
|
|
|
|
|
|
|
|
24,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
886,313
|
|
|
|
2,545,836
|
|
|
|
1,931,417
|
|
|
|
(4,452,593
|
)
|
|
|
910,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
4,226,711
|
|
|
$
|
2,792,404
|
|
|
$
|
2,287,414
|
|
|
$
|
(4,897,352
|
)
|
|
$
|
4,409,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING BALANCE SHEET
As of January 1, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dole Food
|
|
|
|
|
|
Non
|
|
|
|
|
|
|
|
|
|
Company, Inc.
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
ASSETS
|
Cash and cash equivalents
|
|
$
|
39,080
|
|
|
$
|
2,714
|
|
|
$
|
128,353
|
|
|
$
|
|
|
|
$
|
170,147
|
|
Restricted cash and deposits
|
|
|
|
|
|
|
|
|
|
|
51,108
|
|
|
|
|
|
|
|
51,108
|
|
Receivables, net of allowances
|
|
|
560,020
|
|
|
|
117,936
|
|
|
|
517,074
|
|
|
|
(443,765
|
)
|
|
|
751,265
|
|
Inventories
|
|
|
7,405
|
|
|
|
285,757
|
|
|
|
441,804
|
|
|
|
|
|
|
|
734,966
|
|
Prepaid expenses and other assets
|
|
|
8,419
|
|
|
|
9,785
|
|
|
|
49,705
|
|
|
|
|
|
|
|
67,909
|
|
Deferred income tax assets
|
|
|
6,200
|
|
|
|
27,505
|
|
|
|
3,105
|
|
|
|
|
|
|
|
36,810
|
|
Assets
held-for-sale
|
|
|
76,704
|
|
|
|
3,813
|
|
|
|
5,533
|
|
|
|
|
|
|
|
86,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
697,828
|
|
|
|
447,510
|
|
|
|
1,196,682
|
|
|
|
(443,765
|
)
|
|
|
1,898,255
|
|
Investments
|
|
|
2,453,484
|
|
|
|
1,831,009
|
|
|
|
85,081
|
|
|
|
(4,281,660
|
)
|
|
|
87,914
|
|
Property, plant and equipment, net
|
|
|
155,851
|
|
|
|
275,568
|
|
|
|
511,611
|
|
|
|
|
|
|
|
943,030
|
|
Goodwill
|
|
|
|
|
|
|
131,818
|
|
|
|
275,429
|
|
|
|
|
|
|
|
407,247
|
|
Intangible assets, net
|
|
|
689,615
|
|
|
|
11,033
|
|
|
|
433
|
|
|
|
|
|
|
|
701,081
|
|
Other assets, net
|
|
|
69,558
|
|
|
|
8,037
|
|
|
|
141,868
|
|
|
|
|
|
|
|
219,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,066,336
|
|
|
$
|
2,704,975
|
|
|
$
|
2,211,104
|
|
|
$
|
(4,725,425
|
)
|
|
$
|
4,256,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
Accounts payable
|
|
$
|
4,491
|
|
|
$
|
586,121
|
|
|
$
|
374,483
|
|
|
$
|
(443,765
|
)
|
|
$
|
521,330
|
|
Accrued liabilities
|
|
|
77,372
|
|
|
|
209,301
|
|
|
|
355,808
|
|
|
|
|
|
|
|
642,481
|
|
Current portion of long-term debt, net
|
|
|
(1,665
|
)
|
|
|
291
|
|
|
|
8,722
|
|
|
|
|
|
|
|
7,348
|
|
Notes payable
|
|
|
|
|
|
|
|
|
|
|
31,922
|
|
|
|
|
|
|
|
31,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
80,198
|
|
|
|
795,713
|
|
|
|
770,935
|
|
|
|
(443,765
|
)
|
|
|
1,203,081
|
|
Intercompany payables (receivables)
|
|
|
1,752,638
|
|
|
|
(567,550
|
)
|
|
|
(1,185,088
|
)
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
918,346
|
|
|
|
2,921
|
|
|
|
643,058
|
|
|
|
|
|
|
|
1,564,325
|
|
Deferred income tax liabilities
|
|
|
212,468
|
|
|
|
599
|
|
|
|
31,257
|
|
|
|
|
|
|
|
244,324
|
|
Other long-term liabilities
|
|
|
310,517
|
|
|
|
20,244
|
|
|
|
97,715
|
|
|
|
|
|
|
|
428,476
|
|
Equity attributable to shareholders of Dole Food Company,
Inc.
|
|
|
792,169
|
|
|
|
2,453,048
|
|
|
|
1,828,612
|
|
|
|
(4,281,660
|
)
|
|
|
792,169
|
|
Equity attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
24,615
|
|
|
|
|
|
|
|
24,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
792,169
|
|
|
|
2,453,048
|
|
|
|
1,853,227
|
|
|
|
(4,281,660
|
)
|
|
|
816,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
4,066,336
|
|
|
$
|
2,704,975
|
|
|
$
|
2,211,104
|
|
|
$
|
(4,725,425
|
)
|
|
$
|
4,256,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Half Year Ended June 18,
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dole Food
|
|
|
|
|
|
Non
|
|
|
|
|
|
|
|
|
|
Company, Inc.
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow provided by (used in) operating activities
|
|
$
|
65,026
|
|
|
$
|
11,161
|
|
|
$
|
782
|
|
|
$
|
|
|
|
$
|
76,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash received from sales of assets and businesses, net of cash
disposed
|
|
|
2,519
|
|
|
|
881
|
|
|
|
4,596
|
|
|
|
|
|
|
|
7,996
|
|
Capital expenditures
|
|
|
(41
|
)
|
|
|
(16,995
|
)
|
|
|
(18,910
|
)
|
|
|
|
|
|
|
(35,946
|
)
|
Restricted cash and deposits
|
|
|
|
|
|
|
|
|
|
|
45,114
|
|
|
|
|
|
|
|
45,114
|
|
Other
|
|
|
(465
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(465
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow provided by (used in) investing activities
|
|
|
2,013
|
|
|
|
(16,114
|
)
|
|
|
30,800
|
|
|
|
|
|
|
|
16,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt repayments, net of borrowings
|
|
|
517
|
|
|
|
4,001
|
|
|
|
(7,828
|
)
|
|
|
|
|
|
|
(3,310
|
)
|
Long-term debt borrowings
|
|
|
163,000
|
|
|
|
|
|
|
|
43
|
|
|
|
|
|
|
|
163,043
|
|
Long-term debt repayments
|
|
|
(168,282
|
)
|
|
|
(157
|
)
|
|
|
(14,536
|
)
|
|
|
|
|
|
|
(182,975
|
)
|
Proceeds from stock option exercises
|
|
|
312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
312
|
|
Dividends paid to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(2,250
|
)
|
|
|
|
|
|
|
(2,250
|
)
|
Settlement of long-term Japanese yen hedge forwards
|
|
|
|
|
|
|
|
|
|
|
(2,212
|
)
|
|
|
|
|
|
|
(2,212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow used in financing activities
|
|
|
(4,453
|
)
|
|
|
3,844
|
|
|
|
(26,783
|
)
|
|
|
|
|
|
|
(27,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rate changes on cash
|
|
|
|
|
|
|
|
|
|
|
2,461
|
|
|
|
|
|
|
|
2,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
62,586
|
|
|
|
(1,109
|
)
|
|
|
7,260
|
|
|
|
|
|
|
|
68,737
|
|
Cash and cash equivalents at beginning of period
|
|
|
39,080
|
|
|
|
2,714
|
|
|
|
128,353
|
|
|
|
|
|
|
|
170,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
101,666
|
|
|
$
|
1,605
|
|
|
$
|
135,613
|
|
|
$
|
|
|
|
$
|
238,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
DOLE FOOD
COMPANY, INC.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Half Year Ended June 19, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dole Food
|
|
|
|
|
|
Non
|
|
|
|
|
|
|
|
|
|
Company, Inc.
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow provided by operating activities
|
|
$
|
59,393
|
|
|
$
|
20,072
|
|
|
$
|
12,121
|
|
|
$
|
(623
|
)
|
|
$
|
90,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of assets and businesses, net of cash
disposed
|
|
|
1,514
|
|
|
|
74
|
|
|
|
17,196
|
|
|
|
|
|
|
|
18,784
|
|
Capital expenditures
|
|
|
(199
|
)
|
|
|
(15,500
|
)
|
|
|
(16,124
|
)
|
|
|
|
|
|
|
(31,823
|
)
|
Restricted cash and deposits
|
|
|
|
|
|
|
|
|
|
|
(890
|
)
|
|
|
|
|
|
|
(890
|
)
|
Other
|
|
|
(515
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(515
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow provided by (used in) investing activities
|
|
|
800
|
|
|
|
(15,426
|
)
|
|
|
182
|
|
|
|
|
|
|
|
(14,444
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt repayments, net of borrowings
|
|
|
(195
|
)
|
|
|
(6,632
|
)
|
|
|
1,214
|
|
|
|
|
|
|
|
(5,613
|
)
|
Long-term debt borrowings
|
|
|
329,100
|
|
|
|
|
|
|
|
594,118
|
|
|
|
|
|
|
|
923,218
|
|
Long-term debt repayments
|
|
|
(335,506
|
)
|
|
|
(132
|
)
|
|
|
(570,584
|
)
|
|
|
|
|
|
|
(906,222
|
)
|
Payment of debt issuance costs
|
|
|
(10,086
|
)
|
|
|
|
|
|
|
(6,900
|
)
|
|
|
|
|
|
|
(16,986
|
)
|
Payment of initial public offering costs
|
|
|
(957
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(957
|
)
|
Dividends paid to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(1,268
|
)
|
|
|
|
|
|
|
(1,268
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow provided by (used in) financing activities
|
|
|
(17,644
|
)
|
|
|
(6,764
|
)
|
|
|
16,580
|
|
|
|
|
|
|
|
(7,828
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rate changes on cash
|
|
|
|
|
|
|
|
|
|
|
(3,015
|
)
|
|
|
|
|
|
|
(3,015
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
42,549
|
|
|
|
(2,118
|
)
|
|
|
25,868
|
|
|
|
(623
|
)
|
|
|
65,676
|
|
Cash and cash equivalents at beginning of period
|
|
|
20,913
|
|
|
|
2,118
|
|
|
|
96,639
|
|
|
|
|
|
|
|
119,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
63,462
|
|
|
$
|
|
|
|
$
|
122,507
|
|
|
$
|
(623
|
)
|
|
$
|
185,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
Item 2.
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
|
This Managements Discussion and Analysis contains
forward-looking statements that involve a number of risks and
uncertainties. Forward-looking statements, which are based on
managements assumptions and describe Doles future
plans, strategies and expectations, are generally identifiable
by the use of terms such as anticipate,
will, expect, believe,
should or similar expressions. The potential risks
and uncertainties that could cause Doles actual results to
differ materially from those expressed or implied herein are set
forth in Item 1A and Item 7A of Doles Annual
Report on
Form 10-K
for the year ended January 1, 2011 and include:
weather-related phenomena; market responses to industry volume
pressures; product and raw materials supplies and pricing;
changes in interest and currency exchange rates; economic
crises; quotas, tariffs and other governmental actions; and
international conflict.
Overview
Significant highlights for Dole Food Company, Inc. and its
consolidated subsidiaries (Dole) for the quarter and
half year ended June 18, 2011 were as follows:
|
|
|
|
|
Net revenues for the second quarter of 2011 were
$1.9 billion, an increase of 10% from the second quarter of
2010. Revenues in all three of our reporting segments increased,
driven primarily by higher prices.
|
|
|
|
Operating income for the second quarter of 2011 was
$122 million, an increase of 52% from the second quarter of
2010. Higher earnings in our fresh fruit and packaged foods
segments were partially offset by lower results from our fresh
vegetables segment.
|
|
|
|
|
|
Fresh fruit operating income increased primarily as a result of
improved global banana markets, as well as lower shipping and
distribution costs in Europe.
|
|
|
|
Packaged foods operating income increased due to higher pricing,
partially offset by higher product costs worldwide and higher
general and administrative expenses.
|
|
|
|
Fresh vegetables operating income decreased due to higher
product costs in our fresh-packed vegetables business and
packaged salads operations partially offset by higher pricing in
packaged salads.
|
|
|
|
|
|
The restructuring in our fresh fruit segment in Europe, Latin
America and Asia remains on track, with savings for fiscal 2011
estimated at $37 million, of which $14 million has
already been realized in the first half of 2011.
|
|
|
|
We completed amendments to our term loan and revolving credit
facilities. As a result of the amendments, Dole eliminated
certain financial maintenance covenants and reduced borrowing
rates on the revolving credit facilities, with an opportunity to
also reduce future borrowing rates on the term loan.
|
|
|
|
We reached an agreement in principle with the Appeals Division
of the IRS on all issues raised in the examination of
Doles U.S. federal income tax returns for the years
2002-2005,
including those with respect to the 2003 going-private merger
transactions. The original net tax deficiency was
$122 million, plus interest. The final settlement calls for
a cash tax payment of $20 million, plus interest.
|
40
Non-GAAP Financial
Measures
The following is a reconciliation of earnings before interest
expense, income taxes and discontinued operations (EBIT
before discontinued operations) and adjusted earnings
before interest expense, income taxes and depreciation and
amortization (Adjusted EBITDA) to the most directly
comparable U.S. Generally Accepted Accounting Principles
(U.S. GAAP) financial measure:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
Net income
|
|
$
|
83,033
|
|
|
$
|
33,472
|
|
|
$
|
85,078
|
|
|
$
|
56,234
|
|
Income from discontinued operations, net of income taxes
|
|
|
(29
|
)
|
|
|
(327
|
)
|
|
|
(231
|
)
|
|
|
(674
|
)
|
Gain on disposal of discontinued operations, net of income taxes
|
|
|
(339
|
)
|
|
|
|
|
|
|
(339
|
)
|
|
|
|
|
Interest expense
|
|
|
34,837
|
|
|
|
37,138
|
|
|
|
70,307
|
|
|
|
78,188
|
|
Income taxes
|
|
|
13,518
|
|
|
|
9,067
|
|
|
|
18,658
|
|
|
|
12,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT before discontinued operations
|
|
|
131,020
|
|
|
|
79,350
|
|
|
|
173,473
|
|
|
|
145,990
|
|
Depreciation and amortization
|
|
|
24,045
|
|
|
|
23,755
|
|
|
|
47,398
|
|
|
|
50,022
|
|
Net unrealized loss on derivative instruments
|
|
|
2,281
|
|
|
|
11,858
|
|
|
|
32,617
|
|
|
|
15,637
|
|
Net gain on long-term Japanese yen hedges
|
|
|
(4,966
|
)
|
|
|
|
|
|
|
(4,284
|
)
|
|
|
|
|
Foreign currency exchange (gain) loss on vessel obligations
|
|
|
130
|
|
|
|
81
|
|
|
|
2,539
|
|
|
|
(5,093
|
)
|
Net unrealized (gain) loss on foreign denominated instruments
|
|
|
555
|
|
|
|
(1,386
|
)
|
|
|
7,447
|
|
|
|
(5,998
|
)
|
Gain on asset sales
|
|
|
(11
|
)
|
|
|
(950
|
)
|
|
|
(11
|
)
|
|
|
(2,921
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
153,054
|
|
|
$
|
112,708
|
|
|
$
|
259,179
|
|
|
$
|
197,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT before discontinued operations and Adjusted EBITDA are
measures commonly used by financial analysts in evaluating the
performance of companies. EBIT before discontinued operations is
calculated from net income by adding interest expense and income
tax expense, and subtracting income from discontinued
operations, net of income taxes, and gain on disposal of
discontinued operations, net of income taxes. Adjusted EBITDA is
calculated from EBIT before discontinued operations by:
(1) adding depreciation and amortization; (2) adding
the net unrealized loss or subtracting the net unrealized gain
on foreign currency and bunker fuel hedges and the cross
currency swap which do not have a more than insignificant
financing element present at contract inception; (3) adding
the net loss or subtracting the net gain on the long-term
Japanese yen hedges; (4) adding the foreign currency loss
or subtracting the foreign currency gain on the vessel
obligations; (5) adding the net unrealized loss or
subtracting the net unrealized gain on foreign denominated
instruments; and (6) subtracting the gain on asset sales.
Due to the fact that the long-term Japanese yen hedges had more
than an insignificant financing element at inception (as
discussed in Note 14 to the condensed consolidated
financial statements), the liability is treated similar to a
debt instrument and the associated cash flows are classified as
a financing activity. As a result, both the realized and
unrealized gains and losses related to the long-term Japanese
yen hedges are subtracted from or added back to EBIT before
discontinued operations when calculating Adjusted EBITDA. These
adjustments have been made because management excludes these
amounts when evaluating the performance of Dole.
EBIT before discontinued operations and Adjusted EBITDA are not
calculated or presented in accordance with U.S. GAAP, and
EBIT before discontinued operations and Adjusted EBITDA are not
a substitute for net income attributable to shareholders of Dole
Food Company, Inc., net income, income from continuing
operations, cash flows from operating activities or any other
measure prescribed by U.S. GAAP. Further, EBIT before
discontinued operations and Adjusted EBITDA as used herein are
not necessarily comparable to similarly titled measures of other
companies. However, Dole has included EBIT before discontinued
operations and Adjusted EBITDA herein because management
believes that EBIT before discontinued operations and Adjusted
EBITDA are useful performance measures for Dole. In addition,
EBIT before discontinued operations and Adjusted EBITDA are
presented because management believes that these measures are
frequently used by securities analysts, investors and others in
the evaluation of Dole.
41
EBIT before discontinued operations and Adjusted EBITDA have
limitations as analytical tools and should not be considered in
isolation from, or as an alternative to, operating income, cash
flow or other combined income or cash flow data prepared in
accordance with U.S. GAAP. Because of their limitations,
EBIT before discontinued operations and Adjusted EBITDA and the
related ratios presented throughout this Item 2 should not
be considered as measures of discretionary cash available to
invest in business growth or reduce indebtedness. Dole
compensates for these limitations by relying primarily on its
U.S. GAAP results and using EBIT before discontinued
operations and Adjusted EBITDA only supplementally.
Results
of Operations
Selected results of operations for the quarters and half years
ended June 18, 2011 and June 19, 2010 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Half Year Ended
|
|
|
June 18,
|
|
June 19,
|
|
June 18,
|
|
June 19,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(In thousands)
|
|
Revenues, net
|
|
$
|
1,915,725
|
|
|
$
|
1,741,522
|
|
|
$
|
3,601,829
|
|
|
$
|
3,347,396
|
|
Operating income
|
|
|
122,037
|
|
|
|
80,498
|
|
|
|
201,313
|
|
|
|
139,478
|
|
Other income (expense), net
|
|
|
4,337
|
|
|
|
(5,496
|
)
|
|
|
(35,014
|
)
|
|
|
(889
|
)
|
Interest expense
|
|
|
(34,837
|
)
|
|
|
(37,138
|
)
|
|
|
(70,307
|
)
|
|
|
(78,188
|
)
|
Income taxes
|
|
|
(13,518
|
)
|
|
|
(9,067
|
)
|
|
|
(18,658
|
)
|
|
|
(12,242
|
)
|
Net income
|
|
|
83,033
|
|
|
|
33,472
|
|
|
|
85,078
|
|
|
|
56,234
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
(1,267
|
)
|
|
|
(1,151
|
)
|
|
|
(2,272
|
)
|
|
|
(1,760
|
)
|
Net income attributable to shareholders of Dole Food Company,
Inc.
|
|
|
81,766
|
|
|
|
32,321
|
|
|
|
82,806
|
|
|
|
54,474
|
|
Revenues
Revenues in the quarter ended June 18, 2011 increased 10%
to $1.9 billion from $1.7 billion for the quarter
ended June 19, 2010. Higher sales were reported in all
three of Doles operating segments. Fresh fruit sales
increased $141.3 million primarily due to higher banana
volumes sold in North America and Asia, higher global banana
pricing and favorable foreign currency exchange movements in
Europe and Japan. Packaged foods sales increased
$23.3 million primarily due to higher volumes sold in North
America and Asia, as well as improved pricing worldwide. Fresh
vegetables sales increased $9.6 million mainly due to
higher volume and pricing of packaged salads and higher pricing
for fresh-packed vegetables sold in Asia. Net favorable foreign
currency exchange movements in Doles selling locations
resulted in higher revenues of approximately $95 million.
These factors were partially offset by lower volumes of bananas
sold in Europe due to the implementation of the European
restructuring plan.
Revenues in the half year ended June 18, 2011 increased 8%
to $3.6 billion from $3.3 billion for the half year
ended June 19, 2010. Higher sales were reported in all
three of Doles operating segments. Fresh fruit sales
increased $193 million due primarily to the same factors
that impacted sales during the second quarter. Packaged foods
sales increased $35.8 million due primarily to higher
volume and pricing in Asia and Europe and improved pricing in
North America. Fresh vegetables sales increased
$25.5 million due primarily to higher volume and pricing of
packaged salads and higher pricing for fresh-packed vegetables
sold in North America and Asia. Net favorable foreign currency
exchange movements in Doles selling locations resulted in
higher revenues of approximately $115 million.
Operating
Income
For the quarter ended June 18, 2011, operating income
increased to $122 million compared with $80.5 million
for the quarter ended June 19, 2010. Fresh fruit operating
results increased primarily due to higher earnings in
Doles worldwide banana operations. Packaged foods
operating results increased primarily due to higher pricing
partially
42
offset by higher product costs worldwide and higher general and
administrative expenses in North America. These
improvements were partially offset by lower fresh vegetables
operating results due to higher product costs in Doles
fresh-packed vegetables business and packaged salads operations.
If foreign currency exchange rates in Doles significant
foreign operations during the quarter ended June 18, 2011
had remained unchanged from those experienced during the quarter
ended June 19, 2010, Dole estimates that its operating
income would have been lower by approximately $6 million.
For the half year ended June 18, 2011, operating income
increased to $201.3 million compared with
$139.5 million for the half year ended June 19, 2010.
Fresh fruit operating results increased due primarily to the
same factors that impacted the quarter. These improvements were
partially offset by lower operating results in Doles
packaged foods segment due primarily to higher product costs
worldwide and higher levels of marketing expenditures in North
America associated with the product launch of FRUIT
BOWLS®
in 100% juice and fruit in jars in 100% juice. Fresh vegetables
operating results decreased as a result of lower packaged salads
earnings due primarily to higher raw material costs. If foreign
currency exchange rates in Doles significant foreign
operations during the half year ended June 18, 2011 had
remained unchanged from those experienced during the half year
ended June 19, 2010, Dole estimates that its operating
income would have been lower by approximately $5 million.
Other
Income (Expense), Net
For the quarter ended June 18, 2011, other income
(expense), net was income of $4.3 million compared to
expense of $5.5 million for the quarter ended June 19,
2010. The improvement was primarily due to the absence of net
losses of $8.4 million generated on Doles cross
currency swap, which was effectively unwound during the first
quarter of 2011. In addition, net gains of $4.8 million
were recognized on Doles long-term Japanese yen hedges
during the second quarter of 2011. These improvements were
partially offset by losses of $0.6 million recorded during
the second quarter of 2011 on Doles foreign denominated
borrowings compared with unrealized gains of $3.2 million
recorded during the second quarter of 2010.
For the half year ended June 18, 2011, other income
(expense), net was an expense of $35 million compared to
expense of $0.9 million for the half year ended
June 19, 2010. The change was primarily due to unrealized
losses of $27.4 million incurred in connection with
unwinding the cross currency swap and entering into a series of
long-term Japanese yen hedges. In addition, losses were recorded
during the first half of 2011 on Doles foreign denominated
borrowings and British pound sterling vessel obligation of
$8.1 million and $2.5 million, respectively, compared
with gains of $8.6 million and $5.1 million,
respectively, recorded in the first half of 2010. These factors
were partially offset by a decrease in net losses of
$7.9 million on Doles cross currency swap as well as
net gains of $4.8 million from the long-term Japanese yen
hedges.
The cross currency swap was scheduled to mature in June 2011.
During the first quarter of 2011, Dole effectively unwound the
cross currency swap by entering into a transaction to refinance
its obligation under the cross currency swap and through a
series of long-term Japanese yen hedges that mature through
December 2014. The value of these contracts will continue to
fluctuate based on changes in the exchange rate over the life of
the individual forward contracts. Refer to
Note 14 Derivative Financial Instruments for
additional information.
Interest
Expense
Interest expense for the quarter ended June 18, 2011 was
$34.8 million compared to $37.1 million for the
quarter ended June 19, 2010. Interest expense for the half
year ended June 18, 2011 was $70.3 million compared to
$78.2 million for the half year ended June 19, 2010.
Interest expense in both periods decreased primarily as a result
of debt reduction. In addition, interest expense during the
first half of 2011 benefitted from lower effective borrowing
rates.
Income
Taxes
Dole recorded $18.7 million of income tax expense on
$98.5 million of pretax income from continuing operations
for the half year ended June 18, 2011. Income tax expense
included an interest benefit of $2.6 million related to
Doles unrecognized tax benefits. Income tax expense of
$12.2 million on $63.5 million of pretax income from
continuing operations was recorded for the half year ended
June 19, 2010 which included interest expense of
$0.1 million related to Doles unrecognized tax
benefits. Doles effective tax rate varies significantly
from period to
43
period due to the level, mix and seasonality of earnings
generated in its various U.S. and foreign jurisdictions.
For the periods presented, Doles income tax expense
differs from the U.S. federal statutory rate applied to
Doles pretax income primarily due to operations in foreign
jurisdictions that are taxed at a rate lower than the
U.S. federal statutory rate. Income tax expense for the
half year ended June 18, 2011 also benefitted by
$8.4 million, including tax and interest, due to a
favorable court ruling in Ecuador relating to a non-U.S
unrecognized tax benefit. Income tax expense for the half year
ended June 19, 2010 included $2.4 million recorded to
establish a valuation allowance against deferred income tax
assets in Ecuador which, as the result of a recently enacted tax
law, have been determined to be not recoverable. This was offset
by a reduction in Doles liability for unrecognized tax
benefits related to certain foreign jurisdictions.
Income tax expense for the quarters ended June 18, 2011 and
June 19, 2010 were $13.5 million and
$9.1 million, respectively.
Dole is required to adjust its effective tax rate for each
quarter to be consistent with the estimated annual effective tax
rate. Jurisdictions with a projected loss where no tax benefit
can be recognized are excluded from the calculation of the
estimated annual effective tax rate. This could result in a
higher or lower effective tax rate during a particular quarter,
based upon the mix and timing of actual earnings versus annual
projections.
Internal Revenue Service Audit: On
August 27, 2009, the IRS completed its examination of
Doles U.S. federal income tax returns for the years
2002-2005
and issued a Revenue Agents report (RAR) that
includes various proposed adjustments, including with respect to
the 2003 going-private merger transactions. The IRS proposed
that certain funding used in the going-private merger was
taxable and that some related investment banking fees were not
deductible. The net tax deficiency associated with the RAR is
$122 million, plus interest. On October 27, 2009, Dole
filed a protest letter challenging the proposed adjustments
contained in the RAR and has been pursuing resolution of these
issues with the Appeals Division of the IRS. During the quarter
ended June 18, 2011, Dole reached an agreement in principle
with the Appeals Division on all issues. As a result,
Doles total amount of unrecognized tax benefits is
expected to decrease by approximately $41 million, of which
$20 million represents a cash payment. This agreement is
expected to be finalized in the third quarter at which time the
tax of $20 million plus interest of approximately
$13 million will be paid.
Segment
Results of Operations
Dole has three reportable operating segments: fresh fruit, fresh
vegetables and packaged foods. These reportable segments are
managed separately due to differences in their products,
production processes, distribution channels and customer bases.
Management evaluates and monitors segment performance primarily
through, among other measures, EBIT. EBIT before discontinued
operations is calculated from net income by adding interest
expense and income tax expense, and subtracting income from
discontinued operations, net of income taxes, and gain on
disposal of discontinued operations, net of income taxes.
Management believes that segment EBIT provides useful
information for analyzing the underlying business results as
well as allowing investors a means to evaluate the financial
results of each segment in relation to Dole as a whole. EBIT is
not defined under U.S. GAAP and should not be considered in
isolation or as a substitute for net income or cash flow
measures prepared in accordance with U.S. GAAP or as a
measure of Doles profitability. Additionally, Doles
computation of EBIT may not be comparable to other similarly
titled measures computed by other companies, because not all
companies calculate EBIT in the same manner.
44
Revenues from external customers and EBIT for the reportable
operating segments and corporate were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
Revenues from external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresh fruit
|
|
$
|
1,364,778
|
|
|
$
|
1,223,438
|
|
|
$
|
2,539,444
|
|
|
$
|
2,346,401
|
|
Fresh vegetables
|
|
|
278,425
|
|
|
|
268,869
|
|
|
|
524,939
|
|
|
|
499,395
|
|
Packaged foods
|
|
|
272,341
|
|
|
|
249,061
|
|
|
|
537,121
|
|
|
|
501,304
|
|
Corporate
|
|
|
181
|
|
|
|
154
|
|
|
|
325
|
|
|
|
296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,915,725
|
|
|
$
|
1,741,522
|
|
|
$
|
3,601,829
|
|
|
$
|
3,347,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
Fresh fruit EBIT
|
|
$
|
109,597
|
|
|
$
|
67,846
|
|
|
$
|
176,600
|
|
|
$
|
110,999
|
|
Fresh vegetables EBIT
|
|
|
3,634
|
|
|
|
7,396
|
|
|
|
14,730
|
|
|
|
17,886
|
|
Packaged foods EBIT
|
|
|
25,881
|
|
|
|
24,815
|
|
|
|
38,061
|
|
|
|
53,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating segments EBIT
|
|
|
139,112
|
|
|
|
100,057
|
|
|
|
229,391
|
|
|
|
182,714
|
|
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on cross currency swap
|
|
|
|
|
|
|
(10,713
|
)
|
|
|
(3,787
|
)
|
|
|
(14,301
|
)
|
Net gain (loss) on long-term Japanese yen hedges
|
|
|
4,825
|
|
|
|
|
|
|
|
(22,580
|
)
|
|
|
|
|
Net unrealized gain (loss) on foreign denominated instruments
|
|
|
(514
|
)
|
|
|
1,739
|
|
|
|
(6,434
|
)
|
|
|
6,465
|
|
Operating and other expenses
|
|
|
(12,403
|
)
|
|
|
(11,733
|
)
|
|
|
(23,117
|
)
|
|
|
(28,888
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
(8,092
|
)
|
|
|
(20,707
|
)
|
|
|
(55,918
|
)
|
|
|
(36,724
|
)
|
Interest expense
|
|
|
(34,837
|
)
|
|
|
(37,138
|
)
|
|
|
(70,307
|
)
|
|
|
(78,188
|
)
|
Income taxes
|
|
|
(13,518
|
)
|
|
|
(9,067
|
)
|
|
|
(18,658
|
)
|
|
|
(12,242
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
82,665
|
|
|
|
33,145
|
|
|
|
84,508
|
|
|
|
55,560
|
|
Income from discontinued operations, net of income taxes
|
|
|
29
|
|
|
|
327
|
|
|
|
231
|
|
|
|
674
|
|
Gain from disposal of discontinued operations, net of income
taxes
|
|
|
339
|
|
|
|
|
|
|
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
83,033
|
|
|
$
|
33,472
|
|
|
$
|
85,078
|
|
|
$
|
56,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresh
Fruit
Fresh fruit revenues for the quarter ended June 18, 2011
increased 12% to $1.36 billion from $1.22 billion for
the quarter ended June 19, 2010. Worldwide banana sales
increased $59 million as a result of higher volumes sold in
North America and Asia and higher global banana pricing. Banana
sales also benefitted from favorable Japanese yen and euro
foreign currency exchange movements. These improvements were
partially offset by planned lower volumes sold in Europe.
European ripening and distribution sales increased
$53 million as a result of higher local pricing and
favorable euro and Swedish krona foreign currency exchange
movements. Revenues in Asia also increased $16 million due
to higher pricing of other fresh fruit as well as higher volume
and pricing of fresh pineapple. Sales of Chilean deciduous fruit
increased $12 million primarily due to higher volumes
worldwide. Net favorable foreign currency exchange movements in
Doles foreign selling locations resulted in higher
revenues of approximately $92 million during the quarter
ended June 18, 2011. Fresh fruit revenues for the half year
ended
45
June 18, 2011 increased 8% to $2.5 billion from
$2.3 billion for the half year ended June 19, 2010.
The increase in revenues was mainly due to the same factors that
impacted sales during the second quarter. Net favorable foreign
currency exchange movements in Doles foreign selling
locations resulted in higher revenues of approximately
$111 million during the half year ended June 18, 2011.
Doles fresh fruit segment EBIT is significantly impacted
by certain items, which are included in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Half Year Ended
|
|
|
|
June 18,
|
|
|
June 19,
|
|
|
June 18,
|
|
|
June 19,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
Fresh fruit products
|
|
$
|
117,183
|
|
|
$
|
69,534
|
|
|
$
|
188,299
|
|
|
$
|
106,390
|
|
Charges for restructuring and long-term receivables
|
|
|
(5,947
|
)
|
|
|
(762
|
)
|
|
|
(8,702
|
)
|
|
|
(1,370
|
)
|
Unrealized loss on foreign currency and fuel hedges
|
|
|
(1,798
|
)
|
|
|
(1,473
|
)
|
|
|
(629
|
)
|
|
|
(1,543
|
)
|
Net gain on long-term Japanese yen hedge hedges
|
|
|
141
|
|
|
|
|
|
|
|
141
|
|
|
|
|
|
Foreign currency exchange gain (loss) on vessel obligations
|
|
|
(130
|
)
|
|
|
(81
|
)
|
|
|
(2,539
|
)
|
|
|
5,093
|
|
Net unrealized gain (loss) on foreign denominated instruments
|
|
|
137
|
|
|
|
(322
|
)
|
|
|
19
|
|
|
|
(492
|
)
|
Gain on asset sales
|
|
|
11
|
|
|
|
950
|
|
|
|
11
|
|
|
|
2,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fresh fruit EBIT
|
|
$
|
109,597
|
|
|
$
|
67,846
|
|
|
$
|
176,600
|
|
|
$
|
110,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresh fruit EBIT for the quarter ended June 18, 2011
increased 62% to $109.6 million from $67.8 million for
the quarter ended June 19, 2010. Banana EBIT increased as a
result of improved pricing worldwide, as well as lower shipping
and distribution costs in Europe. The decrease in shipping costs
was due primarily to Doles restructuring initiatives which
reduced vessel charters and inland freight costs. These
improvements were partially offset by higher fruit costs
worldwide as well as higher shipping, selling and marketing
costs in North America and Asia. Higher fruit costs
resulted from adverse weather conditions in Latin America which
significantly impacted supply and caused an increase in contract
prices from Latin American growers. EBIT in the European
ripening and distribution business increased as improved pricing
and higher equity earnings were partially offset by higher
product and distribution costs. If foreign currency exchange
rates in Doles significant fresh fruit foreign operations
during the quarter ended June 18, 2011 had remained
unchanged from those experienced during the quarter ended
June 19, 2010, Dole estimates that fresh fruit EBIT would
have been lower by approximately $10.5 million. Fresh fruit
EBIT for the half year ended June 18, 2011 increased 59% to
$176.6 million from $111 million for the half year
ended June 19, 2010. The increase in EBIT was mainly due to
the same factors that impacted EBIT during the second quarter.
If foreign currency exchange rates in Doles significant
fresh fruit foreign operations during the half year ended
June 18, 2011 had remained unchanged from those experienced
during the half year ended June 19, 2010, Dole estimates
that fresh fruit EBIT would have been lower by approximately
$12.3 million.
Fresh
Vegetables
Fresh vegetables revenues for the quarter ended June 18,
2011 increased 4% to $278.4 million from
$268.9 million for the quarter ended June 19, 2010.
Packaged salads revenues increased as a result of higher volumes
sold and higher pricing. Asia fresh-packed vegetables revenues
increased primarily due to favorable changes in product mix and
a favorable Japanese yen foreign currency exchange rate impact.
Revenues in the North America fresh-packed vegetable
business during the second quarter were comparable as improved
pricing for celery and strawberries was offset by lower volume
and pricing of iceberg lettuce. Fresh vegetables revenues for
the half year ended June 18, 2011 increased 5% to
$524.9 million from $499.4 million for the half year
ended June 19, 2010. Packaged salads revenues increased as
a result of higher pricing, higher volumes sold and a favorable
change in product mix. Higher revenues in the North America
fresh-packed vegetable business resulted primarily from
46
improved pricing across all major vegetable product lines,
partially offset by lower volumes. The increase in pricing
resulted from product shortages due to challenging weather
conditions during January and February. Asia fresh-packed
vegetables revenues increased primarily due to higher local
pricing and a favorable Japanese yen foreign currency exchange
rate impact partially offset by lower volumes.
Fresh vegetables EBIT for the quarter ended June 18, 2011
decreased to $3.6 million from $7.4 million for the
quarter ended June 19, 2010. The decrease in EBIT was
primarily due to higher product costs in the North America and
Asia fresh-packed vegetables business. Earnings in the packaged
salads business decreased as result of higher packaging costs
and selling expenses partially offset by improved pricing. In
addition, higher general and administrative expenses were
incurred in the North America fresh-packed vegetables and
packaged salads businesses. Fresh vegetables EBIT for the half
year ended June 18, 2011 decreased to $14.7 million
from $17.9 million for the half year ended June 19,
2010. The decrease in EBIT was mainly due to the same factors
that impacted EBIT during the second quarter except for higher
pricing of iceberg and romaine lettuce in the North America
fresh-packed vegetables business in the first quarter of 2011.
Packaged
Foods
Packaged foods revenues for the quarter ended June 18, 2011
increased 9% to $272.3 million from $249.1 million for
the quarter ended June 19, 2010. Revenues increased
primarily due to higher volumes of packaged fruit products sold
in North America and Asia as well as higher pricing worldwide.
Revenues in North America benefitted from higher volumes
due to the timing of Easter, which occurred later in 2011 than
in 2010. Packaged foods revenues for the half year ended
June 18, 2011 increased 7% to $537.1 million from
$501.3 million for the half year ended June 19, 2010.
The increase in revenues was mainly due to the same factors that
impacted revenues during the second quarter except for higher
volumes in Europe and lower North America volumes sold in the
first quarter of 2011.
EBIT in the packaged foods segment for the quarter ended
June 18, 2011 increased to $25.9 million from
$24.8 million for the quarter ended June 19, 2010.
EBIT increased primarily due to higher pricing partially offset
by higher product, selling, marketing and general and
administrative costs worldwide. The increase in product costs
resulted from higher purchased fruit costs, higher commodity
costs and unfavorable foreign currency exchange movements in
Thailand and the Philippines, where product is sourced. If
foreign currency exchange rates in Doles packaged foods
foreign operations during the quarter ended June 18, 2011
had remained unchanged from those experienced during the quarter
ended June 19, 2010, Dole estimates that packaged foods
EBIT would have been higher by approximately $4 million.
EBIT in the packaged foods segment for the half year ended
June 18, 2011 decreased to $38.1 million from
$53.8 million for the half year ended June 19, 2010.
The decrease in EBIT was due primarily to higher marketing
expense, as well as higher product, selling and general and
administrative costs worldwide partially offset by higher
pricing. The increase in marketing expenditures was associated
with the North America product launch of FRUIT
BOWLS®
in 100% juice and fruit in jars in 100% juice. If foreign
currency exchange rates in Doles packaged foods foreign
operations during the half year ended June 18, 2011 had
remained unchanged from those experienced during the quarter
ended June 19, 2010, Dole estimates that packaged foods
EBIT would have been higher by approximately $7 million.
Corporate
Corporate EBIT was a loss of $8.1 million for the quarter
ended June 18, 2011 compared to a loss of
$20.7 million for the quarter ended June 19, 2010. The
improvement in EBIT was primarily due to the absence of net
losses of $8.4 million generated on the cross currency swap
which was effectively ceased during the first quarter of 2011.
In addition, unrealized gains of $4.8 million were
generated on the long-term Japanese yen hedges during the second
quarter of 2011. Corporate EBIT was a loss of $55.9 million
for the half year ended June 18, 2011 compared to a loss of
$36.7 million for the half year ended June 19, 2010.
The change in EBIT was primarily due to unrealized losses of
$27.4 million incurred in connection with the end of the
cross currency swap. In addition, unrealized losses of $6.4 were
recorded during the first half of 2011 on foreign denominated
instruments compared with unrealized gains of $6.5 million
recorded during the first half of 2010. These factors were
partially offset by a decrease in net losses of
$7.9 million on Doles cross currency swap and
unrealized gains of $4.8 million related to the long-term
Japanese yen hedges. In addition, there was an absence of
write-off of deferred debt issuance costs of $4.6 million
47
associated with Doles March 2010 debt refinancing
transactions and as a well as a decrease in incentive
compensation accruals.
Liquidity
and Capital Resources
Cash flows provided by operating activities were
$77 million for the half year ended June 18, 2011,
compared to $91 million provided by operating activities
for the half year ended June 19, 2010. Operating cash flows
decreased $14 million primarily due to higher inventory
costs due to rising commodity prices and higher receivables due
in part to timing of collections. These factors were partially
offset by higher net income and higher levels of accounts
payables due in part to timing of payments.
Cash flows provided by investing activities were
$16.7 million for the half year ended June 18, 2011,
compared to cash flows used in investing activities of
$14.4 million for the half year ended June 19, 2010.
The change was primarily due to a $44.2 million decrease in
restricted deposits primarily due to the elimination of the
collateral requirement due to the end of the cross currency swap
and a reduction in cash on deposit related to a bank guarantee.
This was partially offset by a decrease in cash proceeds
received from the sale of assets and an increase in capital
expenditures.
Cash flows used in financing activities was $27.4 million
for the half year ended June 18, 2011, compared to
$7.8 million for the half year ended June 19, 2010.
The change was primarily due to an increase in debt repayments.
As of June 18, 2011, Dole had a cash balance of
$238.9 million and an ABL revolver borrowing base of
$289.2 million. There were no borrowings under the ABL
revolver at June 18, 2011. After taking into account
approximately $87.1 million of outstanding letters of
credit issued under the ABL revolver, Dole had approximately
$202.1 million available for borrowings as of June 18,
2011.
Doles term loan and ABL revolver facilities were amended
on July 8, 2011. The amendments, among other things:
(i) for the ABL revolver facility, decreased the applicable
margin for LIBOR borrowings to 1.75% 2.25%, and for
base rate borrowings to 0.75% 1.25%, with the rate
at any time determined by the average historical borrowing
availability; (ii) for the term loan facilities, reduced
the LIBOR floor to 1.25% and increased the LIBOR applicable
margin to 3.75%, and the base rate applicable margin to 2.75%,
with an opportunity to reduce the applicable margin by 0.25%
after December 31, 2011 if Doles Total Leverage Ratio
is 3.50:1.00 or lower; (iii) eliminated the financial
maintenance covenants of total leverage ratio and minimum
interest coverage ratio (such covenants had been in the previous
term loan facilities, but not the revolving credit facility);
(iv) added greater operating and financial flexibility for
Dole; and (v) provided for other technical and clarifying
changes. The amended credit facilities provide $900 million
of term debt due 2018 and up to $350 million of revolving
debt due 2016.
In connection with the July 8, 2011 amendment of the term
loan and ABL revolver facilities, Dole will record a charge of
approximately $13 million to other income (expense) in the
condensed consolidated statement of operations during the third
quarter of 2011. This charge relates to fees incurred in
connection with the refinancing as well as the write-off of
deferred debt issuance costs and debt discounts.
During the third quarter of 2011, Dole repurchased and retired
$38 million of the 13.875% Notes due 2014. As a result
of the repurchase, Dole will record a charge of approximately
$10 million to other income (expense) in the condensed
consolidated statement of operations during the third quarter of
2011. This charge relates to premium paid in connection with the
early debt retirement as well as the write-off of deferred debt
issuance costs and debt discounts
Dole believes that available borrowing capacity under the
revolving credit facility and subsidiaries uncommitted
lines of credit, together with its existing cash balances,
future cash flow from operations, planned asset sales and access
to capital markets will enable it to meet its working capital,
capital expenditure, debt maturity and other commitments and
funding requirements over the next 12 months.
Managements plan is dependent upon the occurrence of
future events which will be impacted by a number of factors
including the general economic environment in which Dole
operates, Doles ability to generate cash flow from its
operations, and its ability to attract buyers for assets being
marketed for sale. Factors impacting Doles cash flow from
operations include, but
48
are not limited to, items such as product pricing, commodity
prices, interest rates and foreign currency exchange rates.
Other
Matters
Recently Issued and Adopted Accounting
Pronouncements: See Note 2 to the condensed
consolidated financial statements for information regarding
Doles adoption of new accounting pronouncements.
European Union (EU) Banana Import
Regime: On January 1, 2006, the EU
implemented a new tariff only import regime for
bananas. Under this regime, the EU mandated a tariff of 176 euro
per metric ton on all banana imports to the EU market from Latin
America. The EU also mandated that 775,000 metric tons of
bananas from African, Caribbean, and Pacific (ACP)
countries could be imported to the EU duty-free.
Several Latin American countries challenged the legality of
aspects of this trade regime by initiating proceedings in the
Dispute Settlement Body (DSB) at the World Trade
Organization (WTO). The DSB issued final rulings
against the EU on November 27, 2008, concluding that the
176 euro per metric ton tariff imposed was legally inconsistent
with WTO trade rules. The DSB also considered whether the zero
tariff reserved for ACP countries was legally inconsistent with
WTO trade rules but recognized that, with the current entry into
force of Economic Partnership Agreements between the EU and ACP
countries, ACP bananas now may have duty-free, quota-free access
to the EU market.
In light of these WTO rulings against the tariff only regime as
implemented, the EU proposed a settlement to the Latin American
banana producing countries (Brazil, Colombia, Costa Rica,
Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Peru, Panama,
and Venezuela) in resolution of the dispute. The settlement
provided for a gradual tariff reduction from 148 euros per
metric ton in 2010 to a final tariff of 114 euro per metric ton
on January 1, 2017 or January 1, 2019 (the 2019 date
applies if no further trade agreements are reached in the
ongoing Doha Development Agenda global trade discussions). The
EU also entered into a settlement with the U.S. and agreed
that the EU will maintain a non-discriminatory, tariff-only
regime for the importation of bananas.
The settlement was accepted and initialed by the EU, the U.S.,
and 11 Latin American banana producing countries on
December 15, 2009. After having provisionally applied since
December 15, 2009, the terms of the settlement were
approved by the European Council in a Council Decision dated
March 7, 2011 and have now entered into force.
During fiscal 2010, Dole recorded tariff refunds of
$8 million for the period from December 15, 2009
through June 8, 2010, of which $7.4 million was
collected. Dole expects the remaining balance to be collected
during the third quarter of 2011. The lower tariff rates
benefitted fiscal 2010 EBIT by an additional amount of
approximately $7 million and first half of 2011 EBIT by
approximately $1 million.
In addition, the EU has negotiated several free trade areas
agreements (FTA) which will allow for an even lower
import tariff on specified volumes of banana exports from
certain countries. An EU-Colombia-Peru FTA has been negotiated
and an EU-Central America (i.e., Costa Rica, El Salvador,
Guatemala, Honduras, Nicaragua and Panama) FTA has been
negotiated. Both of these FTAs must be translated into all EU
languages and are subject to approval by all EU Member States
and the European Parliament before they can come into effect.
Ecuador has not yet negotiated an FTA with the EU on bananas and
may not benefit, like the other Latin American countries party
to an FTA, unless a similar FTA can be negotiated with the EU.
Dole continues to monitor these developments but cannot yet
anticipate when the necessary approvals will be obtained and
when, or if, these FTAs will come into force.
|
|
Item 3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
For the half year ended June 18, 2011, there have been no
material changes in the market risk disclosure presented in
Doles Annual Report on
Form 10-K
for the fiscal year ended January 1, 2011. For information
regarding Doles derivative instruments and hedging
activities, refer to Note 14 to the condensed consolidated
financial statements contained in this Quarterly Report.
49
|
|
Item 4.
|
CONTROLS
AND PROCEDURES
|
An evaluation was carried out as of June 18, 2011 under the
supervision and with the participation of Doles
management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of our disclosure
controls and procedures, as defined in
Rule 13a-15(e)
and
Rule 15d-15(e)
under the Securities Exchange Act. Based upon this evaluation,
Doles Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were
effective as of June 18, 2011.
During the 2nd quarter of 2011, we implemented a new
Enterprise Resource Planning (ERP) system for our North American
packaged foods operation. The implementation was completed and
the system went live on April 24, 2011. An ERP
system is a fully-integrated set of programs and databases that
incorporate order processing, production planning and
scheduling, purchasing, accounts receivable, inventory
management and accounting. This implementation was subject to
various testing and review procedures prior to execution. In
connection with this ERP system implementation, we have updated
our internal control over financial reporting, as necessary, to
accommodate modifications to our business processes and
accounting procedures. There were no changes in our internal
control over financial reporting during the most recent fiscal
quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
PART II.
OTHER INFORMATION
DOLE FOOD COMPANY, INC.
|
|
Item 1.
|
Legal
Proceedings
|
For information regarding legal matters, refer to Note 12
to the condensed consolidated financial statements contained in
this Quarterly Report.
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
|
|
|
10
|
.24*
|
|
Dole Food Company, Inc. Stock Incentive Plan, as amended
|
|
31
|
.1*
|
|
Certification by the Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act
|
|
31
|
.2*
|
|
Certification by the Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act
|
|
32
|
.1
|
|
Certification by the Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act
|
|
32
|
.2
|
|
Certification by the Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act
|
|
101**
|
|
|
The following financial information from Dole Food Inc.s
Quarterly Report on Form 10-Q for the quarter ended June 18,
2011, formatted in XBRL (eXtensible Business Reporting
Language): (i) Condensed Consolidated Statements of
Operations, (ii) Condensed Consolidated Statement of
Comprehensive Income, (iii) Condensed Consolidated Balance
Sheets, (iv) Condensed Consolidated Statements of Cash
Flows, (v) Condensed Consolidated Statement of
Stockholders Equity and (vi) the Notes to Condensed
Consolidated Financial Statements.
|
** Pursuant to Rule 406T of
Regulation S-T,
this interactive data file is deemed not filed or part of a
registration statement or prospectus for purposes of
Sections 11 or 12 of the Securities Act of 1933, as
amended, is deemed not filed for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended, and otherwise
is not subject to liability under these sections.
50
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DOLE FOOD COMPANY, INC.
REGISTRANT
|
|
|
|
By:
|
/s/ Joseph
S. Tesoriero
|
Joseph S. Tesoriero
Executive Vice President and
Chief Financial Officer
Yoon J. Hugh
Vice President, Controller and
Chief Accounting Officer
(Principal Accounting Officer)
July 28, 2011
51
EXHIBIT INDEX
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
|
|
|
10
|
.24*
|
|
Dole Food Company, Inc. Stock Incentive Plan, as amended
|
|
31
|
.1*
|
|
Certification by the Chief Executive Officer pursuant to Section
302 of the Sarbanes- Oxley Act.
|
|
31
|
.2*
|
|
Certification by the Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act.
|
|
32
|
.1
|
|
Certification by the Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act.
|
|
32
|
.2
|
|
Certification by the Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act.
|
|
101**
|
|
|
The following financial information from Dole Food Inc.s
Quarterly Report on Form 10-Q for the quarter ended June 18,
2011, formatted in XBRL (eXtensible Business Reporting
Language): (i) Condensed Consolidated Statements of
Operations, (ii) Condensed Consolidated Statement of
Comprehensive Income, (iii) Condensed Consolidated Balance
Sheets, (iv) Condensed Consolidated Statements of Cash Flows,
(v) Condensed Consolidated Statement of Stockholders
Equity and (vi) the Notes to Condensed Consolidated
Financial Statements.
|
|
|
|
* |
|
Filed herewith |
|
** |
|
Pursuant to Rule 406T of
Regulation S-T,
this interactive data file is deemed not filed or part of a
registration statement or prospectus for purposes of
Sections 11 or 12 of the Securities Act of 1933, as
amended, is deemed not filed for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended, and otherwise
is not subject to liability under these sections. |
|
|
|
Furnished herewith |
52