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8-K - FORM 8-K - DOLE FOOD CO INC | v56908e8vk.htm |
EX-99.2 - EX-99.2 - DOLE FOOD CO INC | v56908exv99w2.htm |
Food Company, Inc.
One Dole Drive Westlake Village, CA 91362 818-874-4000 Fax 818-874-4625
NEWS
RELEASE
Contact: Joseph Tesoriero
Phone: (818) 879-6900
Beth Potillo
Phone: (818) 879-6733
Phone: (818) 879-6900
Beth Potillo
Phone: (818) 879-6733
DOLE FOOD COMPANY, INC. REPORTS SECOND QUARTER 2010 RESULTS
WESTLAKE VILLAGE, California August 3, 2010 Dole Food Company, Inc. today announced
positive financial and operating results for the second quarter ended June 19, 2010. Dole reported
second quarter 2010 income from continuing operations of $33 million as compared with $21 million
in 2009, and Adjusted EBITDA of $113 million compared to $143 million in the second quarter of
2009. Earnings per share from continuing operations for the second quarter were $0.38 per share.
Adjusting for unrealized gains and losses from hedging activities, currency movement on foreign
denominated instruments, as well as gains on asset sales, comparable earnings per share from
continuing operations were $0.49.
David A. DeLorenzo, Doles President and CEO said: We are pleased to announce another strong
quarter despite a challenging economic climate. Our packaged salads business realized higher
volumes and pricing, as well as lower costs. Our packaged foods portfolio also performed well,
with improved earnings, even with Easter sales falling in the first quarter of the year. Consumers
continued to embrace our new product offerings, with the rollout of our Fruit Crisps and Real Fruit
Bites exceeding distribution goals. Our fresh fruit operations improved over the first quarter,
but continued to be negatively impacted by weak market conditions in Europe and Asia. We also
reduced net debt by $51 million in the second quarter.
In the second quarter of 2010, Dole recorded a tariff refund of $7 million associated with the
June 2010 EU banana tariff settlement agreements. Dole estimates that the EU banana tariff
settlement agreements will benefit fiscal 2010 EBIT by approximately $16 million at current foreign
exchange rates.
In a major landmark legal victory, on July 15, 2010, the Los Angeles Superior Court dismissed
Tellez v. Dole, the last remaining lawsuit brought in the U.S. by Nicaraguan plaintiffs claiming to
have been banana workers on Dole contracted farms during the 1970s. Citing rampant fraud by
plaintiffs, the Court vacated the earlier $1.6 million judgment against Dole in favor of four
plaintiffs claiming sterility from DBCP exposure while allegedly working on Dole-contracted farms.
1
Selected Financial Data (Unaudited)
Quarter Ended | Half Year Ended | |||||||||||||||
June 19, | June 20, | June 19, | June 20, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues |
$ | 1,742 | $ | 1,715 | $ | 3,347 | $ | 3,311 | ||||||||
Operating income |
80 | 108 | 139 | 231 | ||||||||||||
Adjusted EBITDA |
113 | 143 | 198 | 264 | ||||||||||||
Cash flow from operations |
72 | 170 | 91 | 209 |
Reconciliation of Net income to EBIT and Adjusted EBITDA (Unaudited):
Quarter Ended | Half Year Ended | |||||||||||||||
June 19, | June 20, | June 19, | June 20, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
Net income |
$ | 33 | $ | 21 | $ | 56 | $ | 125 | ||||||||
Discontinued operations, net |
| | | (2 | ) | |||||||||||
Interest expense |
37 | 50 | 78 | 88 | ||||||||||||
Income taxes |
9 | 9 | 12 | 17 | ||||||||||||
Earnings before interest and
taxes (EBIT) |
79 | 80 | 146 | 228 | ||||||||||||
Depreciation and amortization |
24 | 28 | 50 | 55 | ||||||||||||
Net unrealized (gain) loss on
derivative instruments |
12 | 24 | 16 | (7 | ) | |||||||||||
Foreign currency exchange
(gain) loss on vessel
obligations |
| 7 | (5 | ) | 7 | |||||||||||
Net unrealized (gain) loss on
foreign denominated
instruments |
(1 | ) | 4 | (6 | ) | (2 | ) | |||||||||
Gains on asset sales |
(1 | ) | | (3 | ) | (17 | ) | |||||||||
Adjusted EBITDA |
$ | 113 | $ | 143 | $ | 198 | $ | 264 | ||||||||
See Non-GAAP Measurements below for discussion of EBIT and Adjusted EBITDA.
Revenues
Revenues increased slightly during the quarter ended June 19, 2010. Packaged foods sales
increased primarily due to higher volumes sold worldwide. Fresh fruit sales increased as a result
of higher sales in our European ripening and distribution businesses and higher sales of bananas
and fresh pineapples in North America. In addition, fresh fruit sales benefited from higher sales
of Chilean deciduous fruit and higher volumes of kiwi and citrus sold in Asia. These improvements
were partially offset by lower sales of bananas in Europe and Asia. Fresh fruit revenues were also
impacted by the third and
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fourth quarter 2009 sales of Doles box plants in Latin America. Fresh
vegetables sales in North America increased mainly due to higher pricing of fresh-packed vegetables and packaged
salads as well as higher volumes of packaged salads.
Adjusted EBITDA (Unaudited)
Adjusted EBITDA in the second quarter 2010 decreased $30 million to $113 million. Fresh fruit
Adjusted EBITDA was impacted by lower earnings in Doles worldwide banana and fresh pineapple
operations. Banana earnings declined due to lower local pricing in Asia as well as higher fruit and
shipping costs in North America and Europe. Packaged foods Adjusted EBITDA increased as a result of
lower worldwide product costs and higher sales volumes. Fresh vegetables Adjusted EBITDA increased
due to better performance in the packaged salads business, stronger pricing for celery and
strawberries, as well as lower raw material costs and improved plant utilization.
Cash and Debt (Unaudited)
During the first half of 2010, the Company reduced net debt by $46 million, and ended the second
quarter with $185 million of cash and cash equivalents. Also during the second quarter, the
Company redeemed the remaining $70 million of its 8.875% Senior Notes due 2011.
June 19, | January 2, | |||||||
2010 | 2010 | |||||||
(In millions) | ||||||||
Cash: |
||||||||
Cash and cash equivalents |
$ | 185 | $ | 120 | ||||
Total Debt: |
||||||||
Revolving credit facility |
$ | | $ | | ||||
Term loan facilities |
836 | 739 | ||||||
Senior Notes and Debentures |
697 | 767 | ||||||
Other debt, and debt discount* |
84 | 92 | ||||||
Total Debt |
$ | 1,617 | $ | 1,598 | ||||
Net Debt |
$ | 1,432 | $ | 1,478 | ||||
* | includes $27 million and $20 million of debt discount at June 19, 2010, and January 2, 2010, respectively. |
Segment Information (Unaudited)
Quarter Ended | Half Year Ended | |||||||||||||||
June 19, | June 20, | June 19, | June 20, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues from
external customers: |
||||||||||||||||
Fresh fruit |
$ | 1,224 | $ | 1,222 | $ | 2,347 | $ | 2,343 | ||||||||
Fresh vegetables |
269 | 258 | 499 | 491 | ||||||||||||
Packaged foods |
249 | 235 | 501 | 476 | ||||||||||||
Corporate |
| | | 1 | ||||||||||||
$ | 1,742 | $ | 1,715 | $ | 3,347 | $ | 3,311 | |||||||||
3
Quarter Ended | Half Year Ended | |||||||||||||||
June 19, | June 20, | June 19, | June 20, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
EBIT: |
||||||||||||||||
Fresh fruit |
$ | 68 | $ | 96 | $ | 111 | $ | 195 | ||||||||
Fresh vegetables |
7 | (3 | ) | 18 | 13 | |||||||||||
Packaged foods |
25 | 24 | 54 | 46 | ||||||||||||
Total operating segments |
100 | 117 | 183 | 254 | ||||||||||||
Corporate: |
||||||||||||||||
Unrealized loss on cross
currency swap |
(11 | ) | (24 | ) | (14 | ) | (7 | ) | ||||||||
Net unrealized gain (loss)
on foreign denominated
instruments |
2 | (4 | ) | 6 | 2 | |||||||||||
Operating and other expenses |
(12 | ) | (9 | ) | (29 | ) | (21 | ) | ||||||||
Corporate |
(21 | ) | (37 | ) | (37 | ) | (26 | ) | ||||||||
Total EBIT |
$ | 79 | $ | 80 | $ | 146 | $ | 228 | ||||||||
See Exhibit 1 for further detailed information on segments.
Conference Call
Dole will hold a conference call for investors to discuss its results at 4:45 p.m. EDT today.
Access to a live audio webcast is available at http://investors.dole.com under Webcasts.
Toll-free telephone access will be available by dialing 866-788-0540 in the United States and
857-350-1678 from international locations and providing the conference code 88715852. A replay of
the call will be available until August 17, 2010. To access the telephone replay, dial 888-286-8010
from the United States and 617-801-6888 from international locations and enter the confirmation
code 38086343. A replay of the webcast will be available online at www.dole.com as soon as
possible.
Non-GAAP Measurements
EBIT, Adjusted EBITDA and Comparable income from continuing operations (total and per share) are
measures commonly used by financial analysts in evaluating the performance of companies. EBIT is
calculated by subtracting income from discontinued operations, net of incomes taxes, from net
income, by subtracting the gain on disposal of discontinued operations, net of income taxes, by
adding interest expense and by adding income tax expenses to net income. Adjusted EBITDA is
calculated from EBIT by adding depreciation and amortization from continuing operations, adding the
net unrealized loss or subtracting the net unrealized gain on certain derivative instruments
(foreign currency and bunker fuel hedges and the cross currency swap), adding the foreign currency
loss or subtracting the foreign currency gain on the vessel obligations, adding the net unrealized
loss or subtracting the net unrealized gain on foreign denominated instruments, and by subtracting
gains on asset sales. Comparable income from continuing operations is calculated from income from
continuing operations by adding the net unrealized loss or subtracting the net unrealized gain on
certain derivative instruments (foreign currency and bunker fuel hedges and the cross currency
swap), net of income taxes, adding the foreign currency loss or subtracting the foreign currency
gain on the vessel obligations, net of income taxes, adding the net unrealized loss or
4
subtracting the net unrealized gain on foreign denominated instruments, net of income
taxes, and subtracting gains on asset sales, net of income taxes. These items have been adjusted
because management excludes these amounts when evaluating the performance of Dole. Net debt is
calculated as total debt less cash and cash equivalents.
EBIT, Adjusted EBITDA and Comparable income from continuing operations (total and per share) are
not calculated or presented in accordance with U.S. GAAP and they are not a substitute for net
income attributable to 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,
Adjusted EBITDA and Comparable income from continuing operations (total and per share) as used
herein are not necessarily comparable to similarly titled measures of other companies. However,
Dole has included EBIT, Adjusted EBITDA and Comparable income from continuing operations (total and
per share) herein because management believes that they are useful performance measures for Dole.
In addition, EBIT, Adjusted EBITDA and Comparable income from continuing operations (total and per
share) are presented because management believes that these measures are frequently used by
securities analysts, investors and others in the evaluation of Dole.
Dole, with 2009 net revenues of $6.8 billion, is the worlds largest producer and marketer of
high-quality fresh fruit and fresh vegetables, and is the leading producer of organic bananas. Dole
markets a growing line of packaged and frozen fruit and is a produce industry leader in nutrition
education and research.
This release contains forward-looking statements, within the meaning of the Private Securities
Litigation Reform Act of 1995, that involve a number of risks and uncertainties. Forward looking
statements, which are based on managements current expectations, are generally identifiable by the
use of terms such as may, will, expects, believes, intends, anticipates and similar
expressions. The potential risks and uncertainties that could cause actual results to differ
materially from those expressed or implied herein include weather-related phenomena; market
responses to industry volume pressures; product and raw materials supplies and pricing; energy
supply and pricing; changes in interest and currency exchange rates; economic crises and security
risks in developing countries; international conflict; and quotas, tariffs and other governmental
actions. Further information on the factors that could affect Doles financial results is included
in its SEC filings, including its Annual Report on Form 10-K.
5
Exhibit 1 Detailed Information on Segments (Unaudited)
Segment EBIT was impacted by unrealized gains and losses from hedging activities, currency movement
on foreign denominated instrument and gains on asset sales, which are detailed in the tables below.
Quarter Ended | Half Year Ended | |||||||||||||||
June 19, | June 20, | June 19, | June 20, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
Fresh Fruit |
||||||||||||||||
Revenues |
$ | 1,224 | $ | 1,222 | $ | 2,347 | $ | 2,343 | ||||||||
EBIT: |
||||||||||||||||
Fresh fruit products |
$ | 69 | $ | 103 | $ | 105 | $ | 182 | ||||||||
Unrealized gain
(loss) on foreign
currency and fuel
hedges |
(1 | ) | | (2 | ) | 13 | ||||||||||
Unrealized loss on
foreign denominated
instruments |
(1 | ) | | | | |||||||||||
Foreign currency
exchange gain (loss)
on vessel obligations |
| (7 | ) | 5 | (7 | ) | ||||||||||
Gains on asset sales |
1 | | 3 | 7 | ||||||||||||
Total Fresh Fruit EBIT |
$ | 68 | $ | 96 | $ | 111 | $ | 195 | ||||||||
Quarter Ended | Half Year Ended | |||||||||||||||
June 19, | June 20, | June 19, | June 20, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
Fresh Vegetables |
||||||||||||||||
Revenues |
$ | 269 | $ | 258 | $ | 499 | $ | 491 | ||||||||
EBIT: |
||||||||||||||||
Fresh vegetables products |
$ | 7 | $ | (3 | ) | $ | 18 | $ | 4 | |||||||
Gains on asset sales |
| | | 9 | ||||||||||||
Total Fresh Vegetables EBIT |
$ | 7 | $ | (3 | ) | $ | 18 | $ | 13 | |||||||
Quarter Ended | Half Year Ended | |||||||||||||||
June 19, | June 20, | June 19, | June 20, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
Packaged Foods |
||||||||||||||||
Revenues |
$ | 249 | $ | 235 | $ | 501 | $ | 476 | ||||||||
EBIT: |
||||||||||||||||
Packaged foods products |
$ | 25 | $ | 24 | $ | 54 | $ | 45 | ||||||||
Gains on asset sales |
| | | 1 | ||||||||||||
Total Packaged Foods EBIT |
$ | 25 | $ | 24 | $ | 54 | $ | 46 | ||||||||
6
Exhibit 2 Reconciliation of Income from continuing operations to Comparable income
from continuing operations (Unaudited):
Quarter Ended | ||||||||
June 19, 2010 | ||||||||
(In millions, except per share) | ||||||||
Earnings | ||||||||
per share | ||||||||
Income from continuing operations |
$ | 33 | $ | 0.38 | ||||
Net unrealized loss on derivative
instruments, net of income taxes |
12 | 0.13 | ||||||
Net unrealized (gain) on foreign
denominated instruments, net of income
taxes |
(1 | ) | (0.01 | ) | ||||
Gains on asset sales, net of income taxes |
(1 | ) | (0.01 | ) | ||||
Comparable income from continuing
operations |
$ | 43 | $ | 0.49 | ||||
See Non-GAAP Measurements above for discussion of Comparable income from continuing operations
and earnings per share from Comparable income from continuing operations.
7