-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WXOiJPBTQ+wCXE+Cj27hTClz2GRZjlF2QPVlgGh2/b+4qLUtHjnn59graCLMUEH8 mCZ20/oPE37zoTelBC5dMA== 0000912057-97-010700.txt : 19970329 0000912057-97-010700.hdr.sgml : 19970329 ACCESSION NUMBER: 0000912057-97-010700 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970328 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOLE FOOD COMPANY INC CENTRAL INDEX KEY: 0000018169 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 990035300 STATE OF INCORPORATION: HI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04455 FILM NUMBER: 97566874 BUSINESS ADDRESS: STREET 1: 31355 OAK CREST DRIVE CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 BUSINESS PHONE: 8188796600 MAIL ADDRESS: STREET 1: 31355 OAK CREST DR CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 FORMER COMPANY: FORMER CONFORMED NAME: CASTLE & COOKE INC DATE OF NAME CHANGE: 19910731 10-K 1 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K (MARK ONE) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM TO . COMMISSION FILE NUMBER 1-4455 ------------------------ DOLE FOOD COMPANY, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HAWAII 99-0035300 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number)
31365 OAK CREST DRIVE WESTLAKE VILLAGE, CALIFORNIA 91361 (Address of principal executive offices) Registrant's telephone number, including area code: (818) 879-6600 Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED - ------------------------------------ ------------------------------------ New York Stock Exchange Pacific Stock Exchange Common Stock, No Par Value
Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive Proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. /X/ The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 18, 1997 was approximately $1,884,647,749. The number of shares of Common Stock outstanding as of March 18, 1997 was 59,885,934. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's 1996 Annual Report to Stockholders for the year ended December 28, 1996 are incorporated by reference into Parts I, II and IV. Portions of the registrant's definitive Proxy Statement for its 1997 Annual Meeting of Stockholders are incorporated by reference into Part III. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DOLE FOOD COMPANY, INC. FORM 10-K FISCAL YEAR ENDED DECEMBER 28, 1996 TABLE OF CONTENTS
ITEM NUMBER IN FORM 10-K PAGE - ------------- ---------- PART I 1. Business............................................................................... 1 2. Properties............................................................................. 6 3. Legal Proceedings...................................................................... 8 4. Submission of Matters to a Vote of Security Holders; Executive Officers of the Registrant........................................................................... 8 PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters.............. 10 6. Selected Financial Data................................................................ 10 7. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................................... 10 8. Financial Statements and Supplementary Data............................................ 10 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure... 10 PART III 10. Directors and Executive Officers of the Registrant..................................... 10 11. Executive Compensation................................................................. 11 12. Security Ownership of Certain Beneficial Owners and Management......................... 11 13. Certain Relationships and Related Transactions......................................... 11 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K........................ 11 (a) 1. Index to Financial Statements...................................................... 11 2. Index to Financial Statement Schedules............................................. 11 3. Exhibits........................................................................... 12 (b) Reports on Form 8-K.................................................................... 13 14 Signatures............................................................................................ F-1-F-2 Financial Statements and Financial Statement Schedules................................................
PART I ITEM 1. BUSINESS Dole Food Company, Inc. was founded in Hawaii in 1851 and was incorporated under the laws of Hawaii in 1894. Unless the context otherwise requires, Dole Food Company, Inc. and its consolidated subsidiaries are referred to herein as the "Company" and "Dole". The Company's principal executive offices are located at 31365 Oak Crest Drive, Westlake Village, California 91361, telephone (818) 879-6600. At December 28, 1996, the Company had approximately 46,000 full-time employees worldwide. The Company is engaged in food production and distribution. Dole is one of the largest companies engaged in the worldwide sourcing, growing, processing, distributing and marketing of high quality, branded fresh produce. The Company sources, grows, processes or markets fruits, vegetables, nuts and beverages in the following locations: North America, Latin America, Asia and Europe. The Company's food operations are described below. For detailed financial information with respect to the Company's business and its operations, see the Company's Consolidated Financial Statements and the related Notes to Consolidated Financial Statements, which are included in its 1996 Annual Report for the fiscal year ended December 28, 1996 (the "Dole Annual Report") and incorporated by reference in Part II of this report. FOOD GENERAL Dole is engaged in the worldwide sourcing, growing, processing, distributing and marketing of high quality, branded fresh produce. Dole provides retail and institutional customers and other food product companies with high quality products bearing the DOLE-Registered Trademark- trademark which are produced and improved through research, agricultural assistance and advanced harvesting, processing, packing, cooling, shipping and marketing techniques. Dole is one of the world's largest producers of bananas and pineapples. Dole is also a major marketer of citrus and table grapes worldwide and an industry leader in iceberg lettuce, celery, cauliflower and broccoli and in value-added, pre-cut salads and vegetables. Dole also processes California almonds and dates. Dole's products are produced both directly on Company-owned or leased land and through associated producer and independent grower arrangements pursuant to which Dole provides varying degrees of farming, harvesting, packing, storing, shipping, stevedoring and marketing services, as well as financing through advances to growers of certain products. Fresh fruit and vegetable products, almonds and processed pineapple products are, for the most part, packed and/or processed directly by Dole. Dole utilizes product quality, brand recognition, competitive pricing, effective customer service and consumer marketing programs to enhance its position within the highly competitive food industry. Consumer and institutional recognition of the DOLE-Registered Trademark- trademark and related brands and the association of these brands with high quality food products contribute significantly to Dole's ability to compete in the markets for fresh fruit and vegetables, packaged foods and dried fruit and nuts. The Company owns these trademarks in the United States, Canada and in other countries in which it conducts business and regards them as important corporate assets with high recognition and acceptance. The markets for all of Dole's products are highly competitive. In order to compete successfully, Dole sources products of high quality and seeks to distribute them in worldwide markets on a timely basis. Dole's competitors in the fresh fruit business include a limited number of large international food companies, as well as a large number of smaller independent food companies, grower cooperatives and foreign government-sponsored producers which have intensified competition in recent years. With respect to vegetables, a limited number of grower-shippers in the United States and Mexico supply a significant 1 portion of the domestic fresh vegetable market. However, numerous smaller independent distributors also compete with Dole in the market for fresh vegetables. With respect to processed pineapple, Dole competes against a limited number of large U.S. companies, as well as a substantial number of foreign competitors and independent canners. Dole's citrus and dried fruit and nut products compete in North America primarily against large grower processing and marketing cooperatives with strong brand recognition. Dole's earnings from its fresh fruit, fresh vegetable and dried fruit and nut operations are sensitive to fluctuations in the volatile market prices for these products. Excess supplies often cause severe price competition. Growing conditions in various parts of the world, particularly weather conditions such as floods, droughts and freezes, and diseases and pests are primary factors affecting market prices because of their influence on supply and quality of product. Other factors affecting Dole's operations include the seasonality of its supplies, the ability to process products during critical harvest periods, the timing and effects of ripening, the degree of perishability, the effectiveness of worldwide distribution systems, the terms of various federal and state marketing orders, total worldwide industry volumes, the seasonality of consumer demand, foreign currency exchange fluctuations, foreign importation restrictions and foreign political risks. PRODUCTS Dole sources, distributes and markets fresh fruit products including bananas, pineapples, table grapes, apples, pears, plums, oranges, grapefruit, lemons, mangoes, kiwi, tangelos, melons, cherries and other deciduous, tropical and citrus fruits. Dole sources, harvests, cools, distributes and markets more than 20 different types of fresh vegetable products, including iceberg lettuce, red and green leaf lettuce, romaine lettuce, butter lettuce, celery, cauliflower, broccoli, carrots, brussels sprouts, spinach, red and green onions, asparagus, snow peas, artichokes, strawberries and raspberries. Dole also markets value-added products such as iceberg lettuce based salad mixes, specialty lettuce based salad mixes, complete salad kits which include dressing and condiments, blends of specialty lettuces, red cabbage, peeled mini-carrots, shredded carrots, shredded red cabbage and coleslaw. Dole sources, processes and markets dates and almonds and markets raisins and prunes. Dole's fresh fruit and vegetable products and its consumer dried fruit and nut products are marketed under the DOLE brand, under other brand names owned by the Company, and, in some cases, under private labels. Dole produces and markets processed food products including sliced, chunk, tidbit and crushed pineapple in cans, as well as tropical fruit salad, and markets mandarin oranges. Dole also markets DOLE-Registered Trademark- canned pineapple juice and pineapple juice blend beverages and DOLEWHIP-TM-, a soft-serve, non-dairy dessert, is manufactured and marketed by Precision Food under license from Dole. Dole's products are marketed through more than 50 direct selling offices in North America, approximately 50 in Europe, five in Japan, one each in Hong Kong, Korea, the Middle East and the Philippines, as well as through independent brokers. DOLE NORTH AMERICA DOLE NORTH AMERICA distributes and markets DOLE-Registered Trademark- fresh fruits and vegetables, almonds and dates and distributes and markets other processed food products, including processed pineapple, canned pineapple juices and pineapple juice blend beverages, in North America. Dole North America markets bananas and pineapples grown in Latin America, table grapes grown in the United States, Chile and Mexico, apples and pears grown in the United States and Chile, melons grown in Costa Rica and Ecuador and citrus fruit grown in the United States, as well as other deciduous and tropical fruit grown in the United States, Latin America and Mexico. Fresh pineapple destined for North 2 America is grown by Dole in Hawaii. These products are sold primarily to wholesalers and retail chains, which in turn resell or distribute them to retail food stores. Fresh vegetables marketed by Dole are generally grown by independent growers in California, Arizona, Colorado and northern and central Mexico. The vegetables are generally field packed and transported to Dole's central cooling and distribution facilities. The products are sold to customers in North America, Asia and Western Europe. In early 1997 the Company announced its decision to close its raisin and prune processing facilities. Retail packs of raisins and prunes will be processed and packed through co-production arrangements pursuant to strict specifications and under Company supervision designed to ensure consistently high product quality. Almonds are sourced from independent growers and, to a lesser extent, produced by Dole North America. They are sold in bulk for cereal, confectionery and other food processors and to a lesser extent, packaged for the retail consumer. They are marketed overseas, primarily in Western Europe and Asia, and domestically. Dole has an agreement with Nestle Frozen, Refrigerated & Ice Cream Companies, Inc., a subsidiary of Nestle USA, Inc., pursuant to which Dole has licensed to Nestle its rights to market and manufacture processed products in key segments of the frozen novelty business in the United States and Canada, including FRUIT 'N JUICE-Registered Trademark-, SUNTOPS-TM-, FRESH LITES-Registered Trademark-, FRUIT 'N YOGURT-TM-, FRUIT 'N SORBET-TM- and FRUIT 'N CREAM-TM- bars and, in the premium novelty category, Fruit Sorbet. Certain pineapple and pineapple blend fruit juices are obtained through co-production arrangements with independent manufacturers. Co-producers manufacture these products pursuant to strict specifications and under Company supervision designed to ensure consistently high product quality. DOLE LATIN AMERICA DOLE LATIN AMERICA sources and transports bananas grown in Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, Panama and Venezuela for markets principally in North America, Europe and the Mediterranean. Fresh pineapples destined for the North American and Western European markets are grown by Dole Latin America on plantations in Honduras and sourced from independent producers in Costa Rica. Dole Latin America is continuing to wind down its fresh pineapple operation in the Dominican Republic. Dole Latin America sources table grapes, apples, pears and other deciduous fruit grown in Chile, melons grown in Costa Rica and Ecuador, citrus fruit grown in Honduras and Argentina, and mangoes from Ecuador, Guatemala, Honduras, Mexico and Peru for markets in North America, Western Europe and Asia. Dole operates a fleet of 10 refrigerated containerships and 32 breakbulk refrigerated ships, of which 22 are Company-owned or bareboat chartered and the remainder are time chartered. From time to time, excess capacity may be chartered to others or may carry commercial cargo for third parties. Dole Latin America conducts other food and beverage operations in Honduras, including an approximately 81% interest in a beer and soft drink bottling operation, a bottle crown plant, a plastic injection molding facility used primarily for the manufacture of beer and soft drink plastic cases, a sugar mill and sugar cane plantations, as well as a majority interest in an edible oils refinery, a laundry soap factory, a palm oil extraction operation and a palm oil plantation. The soft drink bottling operation, which sells its products primarily in Honduras, competes against other local bottlers. Competition focuses on product quality, consumer marketing programs and the effectiveness of the distribution system. DOLE ASIA DOLE ASIA sources bananas and pineapples grown in the Philippines and transports them to markets principally in Asia and the Middle East. Pineapples used for processed products distributed around the world are grown primarily in Thailand and the Philippines. Dole Asia also sources DOLE-Registered Trademark- and 3 MOUNTAIN-Registered Trademark- asparagus from the Philippines and distributes and markets these products in Japan and other Asian countries. Snow Dole Co., Ltd., a joint venture of Dole and Snow Brand Milk Products Co., Ltd. of Japan, processes and distributes frozen desserts, canned pineapple and other processed foods in Japan. Dole Asia also produces leather-leaf ferns, anthuriums and other tropical flowers in the Philippines for export to Japan. The winding down of Dole Asia's shrimp farming operation in the Philippines is continuing. DOLE EUROPE DOLE EUROPE is a major importer of bananas and other fresh fruits, dried fruits, nuts and canned fruits in Europe and the Near East. Dole Europe operates four regional banana ripening and distribution companies in France which complement the Company's investment in the largest French banana producer, with banana plantations in Cameroon, import operations in France and Spain, and banana ripening in eight regional facilities in France and three in Spain. Dole Europe owns and operates four regional banana ripening facilities in Spain. Dole Europe is a minority partner with the Jamaican Producer Group (the largest banana producer in Jamaica) in the Jamaican Producers Fruit Distributors Ltd. in the United Kingdom. This banana ripening and fruit distribution company operates five facilities in the United Kingdom. This joint venture distributes fresh fruits and bananas under the DOLE brand, as well as Jamaican bananas, fruits and vegetables direct to retail stores in the United Kingdom. Dole Europe is the majority partner, with the Livorno Stevedore Company C.I.L.P., in a major port discharge and distribution facility in the Italian port of Livorno. Dole Europe operates three banana ripening facilities and fruit and vegetable distribution facilities in Italy. Dole Europe operates a major fresh fruit and vegetable distributor and banana ripener in Northern Germany. A distribution facility for fresh fruits and banana ripening in Turkey was completed in 1996. In February 1996, Dole Europe acquired Pascual Hermanos, a major Spanish citrus and vegetable producer and exporter. Dole Europe owns and operates a European dried fruit and nut business which sources products from around the world for processing and packaging in France and distribution in France and to other European markets. RESEARCH AND DEVELOPMENT Dole's research and development programs concentrate on improvements in productivity, food safety and product quality of existing products and the development of new value-added products, as well as agricultural research and packaging design. Agricultural research is directed toward improving product yields and product quality by examining and improving agricultural practices in all phases of production (such as development of specifically adapted plant varieties, land preparation, fertilization, cultural practices, pest and disease control, and post-harvesting, packing, and shipping procedures), and includes on-site technical services and the implementation and monitoring of recommended agricultural practices. Specialized machinery is also developed for various phases of agricultural production and packaging which reduces labor, improves productivity and efficiency and increases product quality. Agricultural research is conducted at field facilities primarily in California, Hawaii, Latin America and Asia. WORLDWIDE OPERATIONS Dole has significant food sourcing and related operations in Chile, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, the Philippines, Thailand and the United States. Dole also sources food products in Algeria, Argentina, Australia, Cameroon, the Dominican Republic, Greece, Italy, Ivory Coast, Mexico, New Zealand, Nicaragua, Panama, Peru, Spain, Syria, Tunisia, Turkey and Venezuela. Significant volumes 4 of Dole's fresh fruit and packaged products are marketed in Canada, Western Europe, Japan and the United States, with lesser volumes marketed in New Zealand, Hong Kong, South Korea, Russia, Australia and certain countries in Asia, Eastern Europe, Scandinavia, the Middle East and Central and South America. Exports of Dole's products to these countries, particularly China, Japan, Russia, South Korea, Taiwan and the Middle East, are subject to various restrictions which may be increased or reduced in response to international political pressures, thus affecting Dole's ability to compete in these markets. Some of Dole's dried fruit and nut products are marketed to Asia and Western Europe. The European Union ("EU") banana regulations which impose quotas and tariffs on bananas continue to be in effect. In addition, in 1995, four Latin American countries (Costa Rica, Colombia, Nicaragua and Venezuela) implemented an agreement with the EU to receive a specific percentage share of the import quota. Trade negotiations and discussions continue between the EU, the United States and the individual banana exporting countries. These trade negotiations could lead to further changes in the regulations governing banana exports to the EU. The net impact of these changing regulations on Dole's future results of operations is not determinable at this time. Dole's foreign operations are subject to risks of expropriation, civil disturbances, political unrest, increases in taxes and other restrictive governmental policies, such as import quotas. Loss of one or more of its foreign operations could have a material adverse effect on Dole's operating results. Dole attempts to maintain a cordial working relationship in each country where it operates. Because Dole's operations are a significant factor in the economies of certain countries, its activities are subject to intense public and governmental scrutiny, and may be affected by changes in the status of the host economies, the makeup of the government or even public opinion in a particular country. The Company distributes its products in more than 90 countries throughout the world. Dole's international sales are usually transacted in U.S. dollars and major European and Asian currencies, while certain costs are incurred in currencies different from those that are received from the sale of the product. Results of operations may be affected by fluctuations in currency exchange rates in both the sourcing and selling locations. ENVIRONMENTAL AND REGULATORY MATTERS Dole's agricultural operations are subject to a broad range of evolving environmental laws and regulations in each country in which it operates. In the United States, these laws and regulations include the Food Quality Protection Act of 1996, the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and Rodenticide Act and the Comprehensive Environmental Response, Compensation and Liability Act. Compliance with these foreign and domestic laws and related regulations is an ongoing process which is not currently expected to have a material effect on Dole's capital expenditures, earnings or competitive position. Environmental concerns are, however, inherent in most major agricultural operations, including those conducted by Dole, and there can be no assurance that the cost of compliance with environmental laws and regulations will not be material. Moreover, it is possible that future developments, such as increasingly strict environmental laws and enforcement policies thereunder, and further restrictions on the use of agricultural chemicals could result in increased compliance costs. Dole's food operations are also subject to regulations enforced by, among others, the U.S. Food and Drug Administration and state, local and foreign equivalents and to inspection by the U.S. Department of Agriculture and other federal, state, local and foreign environmental and health authorities. The U.S. Food and Drug Administration enforces statutory standards regarding the branding and safety of food products, establishes ingredients and manufacturing procedures for certain foods, establishes standards of identity for foods and determines the safety of food substances in the United States. Similar functions are performed by state, local and foreign governmental entities with respect to food products produced or distributed in their respective jurisdictions. 5 ITEM 2. PROPERTIES The Company maintains executive offices in Westlake Village, California and auxiliary executive offices in Los Angeles, California and New York, New York, all of which are leased from third parties. Dole's various divisions also maintain headquarters offices in Westlake Village, Bakersfield and Salinas, California, which are leased from third parties, and in Orland, California and Wenatchee, Washington, which are owned by the Company. The Company owns its Latin American regional headquarters building in Costa Rica, as well as offices in Colombia and Honduras. Dole Europe maintains its European headquarters in Paris, France and regional offices in Hamburg, Germany, Brussels, Belgium and Genoa, Italy, which are leased from third parties. Dole Asia maintains offices in Hong Kong, Manila, the Philippines and Tokyo, Japan, which are leased from third parties. The inability to renew any of the above office leases by the Company would not have a material adverse effect on the Company's operating results. The Company and each of its subsidiaries believe that their property and equipment are generally well maintained, in good operating condition and adequate for their present needs. The following is a description of the Company's significant properties. DOLE DOLE NORTH AMERICA Dole's Hawaii pineapple operations for the fresh produce market are located on the island of Oahu and total approximately 7,000 acres, 5,500 of which are owned by the Company and the remainder of which are leased. Dole produces citrus on approximately 9,000 acres in the San Joaquin Valley of California owned directly or through partially-owned agricultural partnerships and on substantial additional acreage under management arrangements, as well as through independent growing arrangements. Dole also provides care and management services for approximately 10,000 citrus acres in Florida. Citrus is packed in six Company-owned or leased packing houses - five in California and one in Florida. Dole, through a joint venture, also operates a 175,000 square foot packing house in southwest Florida. Domestic table grapes are sourced from approximately 4,000 acres on four Company-owned vineyards in the San Joaquin Valley. Domestic table grapes are fumigated and cooled in two Company-owned facilities in the San Joaquin Valley. Dole produces wine grapes on approximately 400 acres and stone fruit on approximately 800 acres of Company-owned property in the San Joaquin Valley. The Company owns a cherry packing and processing facility in Victor, California. Dole produces apples and pears directly from five Company-owned orchards on approximately 1,400 productive acres in Wenatchee and Chelan, Washington as well as through independent growing arrangements. The Company also owns apple and pear storage, processing and packing facilities in Wenatchee and Chelan. The Company owns approximately 1,400 acres of farmland in California and Arizona, and leases approximately 8,500 acres of farmland in California and another 4,000 acres in Arizona in connection with Dole's vegetable operations. The majority of this acreage is farmed under joint growing arrangements with independent growers, while the remainder is farmed by Dole. The Company owns cooling, packing and shipping facilities in Yuma, Arizona and the following California cities: Marina, Holtville, Guadalupe, Gonzales and Huron. Additionally, the Company has partnership interests in facilities in Yuma, Arizona and Mexico, and leases facilities in Oxnard, California. The Company owns state-of-the-art, value-added processing plants in Yuma, Arizona and Soledad, California. Dole produces almonds from approximately 850 acres and pistachios from approximately 3,000 acres of orchards in the San Joaquin Valley, owned by the Company, or by agricultural partnerships in which the Company has an interest, or leased. The Company leases approximately 60 acres of date gardens in the Coachella Valley. 6 The Company owns and operates one almond processing and packing plant and three almond receiving and storage facilities, all of which are located in the San Joaquin and Sacramento Valleys. The Company owns and operates a date processing plant in the Coachella Valley. The phase-out of the Company's Hawaii sugar operations, first announced in 1994, was completed in 1996. The former sugar plantation consists of approximately 12,000 acres (approximately 6,200 acres of which are owned and the remainder of which are leased) which are partially used for diversified agricultural crops. Portions of the Company's fresh fruit and vegetable farm properties are irrigated by surface water supplied by local government agencies using facilities financed by federal or state agencies, as well as from underground sources. Water received through federal facilities is subject to acreage limitations under the 1982 Reclamation Reform Act. The quantity and quality of these water supplies varies depending on weather conditions and government regulations. The Company believes that under normal conditions these water supplies are adequate for current production needs. DOLE LATIN AMERICA Dole produces bananas directly from Company-owned plantations in Costa Rica, Colombia, Honduras and Venezuela as well as through associated producers or independent growing arrangements in those countries and in Ecuador, Guatemala, Panama and Nicaragua. The Company owns approximately 40,400 acres in Honduras, 31,400 acres in Costa Rica, 3,600 acres in Colombia and 400 acres in Venezuela. During 1996 Dole acquired a 50% interest in a Guatemala banana producer which owns or controls approximately 13,100 acres in Guatemala. Dole also grows pineapple on approximately 6,000 acres of owned land in Honduras, primarily for the fresh produce market, and owns a juice concentrate plant in Honduras for pineapple and citrus. Dole produces citrus on approximately 650 acres of Company-owned land and operates a grapefruit packing house in Honduras. Dole grows grapes, stonefruit, kiwi and pears on approximately 900 Company-owned acres in Chile. Dole owns and operates 11 packing and cold storage facilities, a corrugated box plant and a wooden grape box plant in Chile. Dole operates Company-owned corrugated box plants in Colombia, Costa Rica, Ecuador and Honduras. The Company has an interest in the following properties in Honduras: an approximately 81% interest in a beer and soft drink bottling operation, a bottle crown plant, a plastic injection molding facility used primarily for the manufacture of beer and soft drink plastic cases and a sugar mill, as well as a majority interest in an edible oils refinery, a laundry soap factory, a palm oil extraction operation and 3,800 acres of palm oil plantation. Dole operates a fleet of 10 refrigerated containerships and 32 breakbulk refrigerated ships, of which 22 are Company-owned or bareboat chartered and the remainder are time chartered. The Company also owns or leases approximately 9,500 refrigerated containers and owns or leases approximately 4,000 chassis and gensets. From time to time, excess capacity may be chartered to others or may carry commercial cargo for third parties. DOLE ASIA Dole operates a pineapple plantation of approximately 25,000 acres in the Philippines. Originally covered by a grower agreement between Dole and a government-owned and controlled corporation, approximately 22,000 acres of the plantation have been transferred to a cooperative of Dole employees that will acquire the land pursuant to an agrarian reform law. The remaining acreage in the Philippines is farmed pursuant to farm management contracts. A cannery, chillroom, juice concentrate plant, corrugated box plant and can manufacturing plant, each owned by Dole, are located near the plantation. 7 Dole's Thailand subsidiary owns and operates a cannery, can plant and juice concentrate plant located in central Thailand and a second multi-fruit cannery in southern Thailand. Through a subsidiary in Thailand controlled by Dole, Dole grows pineapple on approximately 3,900 acres of leased land and purchases additional supplies of pineapple in Thailand on the open market. Dole also sources bananas through associated producers or independent growing arrangements in the Philippines. A plastic extruding plant and a box forming plant, both owned by Dole, are located near the plantations. With joint venture partners, Dole Asia is developing approximately 7,500 acres of citrus orchards in southwestern China. DOLE EUROPE Dole owns four banana ripening and fruit distribution facilities in France and four in Spain, three in Italy and one in Germany. The Company has a minority interest in a French company which has eight banana ripening and fruit distribution facilities in France and three in Spain. This French company owns a majority interest in banana plantations in Cameroon and pineapple plantations in the Ivory Coast, and has banana producing interests in the Ivory Coast. Dole owns a minority interest in a banana ripening and fruit distribution company with five facilities in the United Kingdom. Dole Europe is the majority owner in a port terminal and distribution facility in Livorno, Italy. The Company owns a banana ripening and fruit distribution facility near Istanbul, Turkey. In France, the Company owns a dried fruit and nut processing, packaging and warehousing facility in Vitrolles, a date processing and packing plant in Marseille and a prune processing and packaging plant in Agen. ITEM 3. LEGAL PROCEEDINGS In the Company's Form 10-QA for the quarter ended October 5, 1996, the Company described certain lawsuits that had been filed in Texas against some of the manufacturers of a formerly widely used agricultural chemical called DBCP, the Company and several of its competitors. In these lawsuits, a large number of foreign nationals allege personal injuries caused by contact with DBCP. The plaintiffs claim that during the 1960's and 1970's they were employees of Company subsidiaries, competitors and independent local growers. In October 1995, four of the six cases pending in Texas state courts were removed to Texas federal court and dismissed by the Texas federal court on the grounds that the plaintiffs' home countries are the more appropriate forums for the claims. This dismissal involved approximately 75% of the Texas plaintiffs, many of whom have now filed claims in their home countries of Costa Rica, Ecuador, Honduras, Nicaragua and the Philippines. The two remaining Texas state court cases were removed to Texas federal court, one of which has since been dismissed. Similar DBCP actions were filed in Louisiana state court in June 1995 by plaintiffs from some of the same foreign countries. The Louisiana cases were removed to federal court but were remanded in September 1996. In May 1996, additional DBCP actions were filed in Mississippi state court. These cases have been removed to federal court. As to all such matters, the Company has denied liability and asserted substantial defenses. In the opinion of management, after consultation with outside counsel, the pending lawsuits are not expected to have a material adverse effect on the Company's financial position or results of operations. The Company is involved from time to time in various claims and legal actions incident to its operations, both as plaintiff and defendant. In the opinion of management, after consultation with outside counsel, none of the claims or actions to which the Company is a party is expected to have a material adverse effect on the Company's financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the quarter ended December 28, 1996. 8 EXECUTIVE OFFICERS OF THE REGISTRANT Below is a list of the names and ages of all executive officers of the Company as of March 14, 1997 indicating their positions with the Company and their principal occupations during the past five years. The current terms of the executive officers will expire at the next organizational meeting of the Company's Board of Directors or at such time as their successors are elected.
POSITIONS WITH THE COMPANY AND SUBSIDIARIES AND FIVE-YEAR EMPLOYMENT NAME AND AGE HISTORY - ------------------------------------ --------------------------------------------------------------------------- David H. Murdock (73)............... Chairman of the Board, Chief Executive Officer and Director of the Company since July 1985. Chairman of the Board, Chief Executive Officer and Director of Castle & Cooke, Inc. since October 1995. Since June 1982, Chairman of the Board and Chief Executive Officer of Flexi-Van Leasing, Inc., a Delaware corporation wholly-owned by Mr. Murdock. Sole owner and developer of the Sherwood Country Club in Ventura County, California, and numerous other real estate developments; also sole stockholder of numerous corporations engaged in a variety of business ventures and in the manufacture of textile-related products and industrial and building products. David A. DeLorenzo (50)............. President and Chief Operating Officer of the Company since March 1996. President of Dole Food Company-International from September 1993 to March 1996. Executive Vice President of the Company from July 1990 to March 1996. Director of the Company since February 1991. President of Dole Fresh Fruit Company from September 1986 to June 1992. Gerald W. LaFleur (64).............. Executive Vice President of the Company since April 1992. Executive Vice President of Pacific Holding Company (a sole proprietorship of Mr. Murdock) and Vice President of a number of companies wholly-owned by Mr. Murdock since July 1991. Prior to July 1991, partner in Arthur Andersen LLP. David A. Cohen (33)................. Senior Vice President-Acquisitions and Investments of the Company since October 1996. Director of Mergers and Acquisitions of the Company from March 1991 to December 1996. Director of Investments of Pacific Holding Company (a sole proprietorship of Mr. Murdock) since March 1991. Harvey J. Heimbuch (64)............. Vice President-Controller and Chief Accounting Officer of the Company since December 1996. Vice President-Finance of Dole Packaged Foods Company from May 1988 to December 1996. George R. Horne (60)................ Vice President-Human Resources of Dole since February 1986. Vice President of the Company since October 1982. Edward A. Lang, III (41)............ Vice President-Treasurer of the Company since July 1996. Assistant Treasurer from December 1993 to July 1996. Manager of International Finance of the Company from June 1989 to December 1993. Patrick A. Nielson (46)............. Vice President-International Legal and Regulatory Affairs of the Company since October 1995. Vice President and General Counsel-Food Operations of the Company from May 1994 to October 1995. General Counsel-Food Operations of the Company from July 1991 to May 1994. Vice President of Dole Fresh Fruit Company since 1983.
9
POSITIONS WITH THE COMPANY AND SUBSIDIARIES AND FIVE-YEAR EMPLOYMENT NAME AND AGE HISTORY - ------------------------------------ --------------------------------------------------------------------------- J. Brett Tibbitts (41).............. Vice President, Corporate General Counsel and Corporate Secretary of the Company since October 1995. Vice President and Corporate General Counsel of the Company from May 1994 to October 1995. General Counsel - Corporate of the Company from June 1992 to May 1994. Deputy General Counsel of the Company from January 1990 to June 1992. Assistant General Counsel of the Company from January 1988 to June 1990. Roberta Wieman (53)................. Vice President of the Company since February 1995. Executive Assistant to the Chairman of the Board and Chief Executive Officer from November 1991 to February 1995. Vice President and Corporate Secretary of Castle & Cooke, Inc. since April 1996. Secretary of Pacific Holding Company (a sole proprietorship of Mr. Murdock) since January 1992.
PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS As of March 18, 1997, there were approximately 13,270 holders of record of the Company's Common Stock. Additional information required by Item 5 is contained on pages 33, 36, 41 and 43 of the Dole Annual Report. Such information is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA There is hereby incorporated by reference the information appearing under the caption "Results of Operations and Selected Financial Data" on page 41 of the Dole Annual Report. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS There is hereby incorporated by reference the information appearing under the caption "Management's Discussion and Analysis of Results of Operations and Financial Position" on pages 38, 39 and 40 of the Dole Annual Report. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA There is hereby incorporated by reference the information appearing on pages 25 through 36 of the Dole Annual Report. See also Item 14 of this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in the Company's independent public accountants for the 1996 and 1995 fiscal years nor have there been any disagreements with the Company's independent public accountants on accounting principles or practices for financial statement disclosures. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT There is hereby incorporated by reference the information regarding the Company's directors to appear under the caption "Election of Directors" in the Company's definitive proxy statement for its 1997 Annual Meeting of Stockholders (the "1997 Proxy Statement"). See the list of the Company's executive officers and related information under "Executive Officers of the Registrant", which is set forth in Part I hereof. 10 ITEM 11. EXECUTIVE COMPENSATION There is hereby incorporated by reference the information to appear under the captions "Remuneration of Directors" and "Compensation of Executive Officers" in the 1997 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT There is hereby incorporated by reference the information with respect to security ownership to appear under the captions "General Information", "Beneficial Ownership of Certain Stockholders" and "Security Ownership of Directors and Executive Officers" in the 1997 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There is hereby incorporated by reference the information to appear under the caption "Certain Transactions" in the 1997 Proxy Statement. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. Financial Statements: The following consolidated financial statements are included in the Dole Annual Report and are incorporated herein by reference:
ANNUAL REPORT PAGES --------- Consolidated Statements of Income - fiscal years ended December 28, 1996, December 30, 1995 and December 31, 1994............................................................................................... 25 Consolidated Balance Sheets - December 28, 1996 and December 30, 1995................................... 26 Consolidated Statements of Cash Flow - fiscal years ended December 28, 1996, December 30, 1995 and December 31, 1994...................................................................................... 27 Notes to Consolidated Financial Statements.............................................................. 28-36 Report of Independent Public Accountants................................................................ 37
2. Financial Statement Schedules:
FORM 10-K PAGES --------- Independent Public Accountants' Report on Financial Statement Schedule.................................. F-1 Schedule II - Valuation and Qualifying Accounts......................................................... F-2
All other schedules are omitted because they are not applicable, not required or the information is included elsewhere in the financial statements or notes thereto. 11 3. Exhibits:
EXHIBIT NO. - --------- 3.1 The Restated Articles of Association of the Company, as amended through July 30, 1991. Incorporated by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 1991, File No. 1-4455. 3.2 By-Laws of the Company, as amended through March 25, 1993. Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No. 1-4455. 4.1 Credit Agreement dated as of July 29, 1996 among the Company, The Chase Manhattan Bank, as Administrative Agent and Lender; Bank of America National Trust & Savings Association, as Syndication Agent and Lender; Citibank, N.A., as Documentation Agent and Lender; and the financial institutions which are Lenders thereunder, relating to the Company's $600 million revolving credit facility. Incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-QA for the quarter ended October 5, 1996, File No.1-4455. 4.2 Indenture dated as of April 15, 1993 between the Company and Chemical Trust Company of California, relating to $300 million of the Company's senior notes. Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, event date May 6, 1993, File No. 1-4455. 4.3 Indenture dated as of July 15, 1993 between the Company and Chemical Trust Company of California, relating to $400 million of the Company's senior notes. Incorporated by reference to Exhibit 4 to the Company's Current Report on Form 8-K, event date July 15, 1993, File No. 1-4455. 4.4 The Company agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument with respect to issues of long-term debt of the Company and its subsidiaries, the authorized principal amount of which does not exceed 10% of the consolidated assets of the Company and its subsidiaries.
Executive Compensation Plans and Arrangements - Exhibits 10.1 - 10.11: 10.1 The Company's 1991 Stock Option and Award Plan, as amended through January 29, 1997. 10.2 The Company's 1982 Stock Option and Award Plan, as amended. Incorporated by reference to Exhibit 28(a) to the Company's Report on Form S-8 filed on May 22, 1989, Registration No. 33-28782. 10.3 Dole Food Company, Inc. Executive Supplementary Retirement Plan (effective January 1, 1989), First Restatement. Incorporated by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 1990, File No. 1-4455. 10.4 Bonus Agreement dated as of August 30, 1991 by and between the Company and David A. DeLorenzo, with promissory note dated September 5, 1991 in the principal amount of $500,000 by David A. DeLorenzo in favor of the Company. Incorporated by reference to Exhibit 10(e) to the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 1991, File No. 1-4455. 10.5 Employment Agreement between the Company and Gerald W. LaFleur. Incorporated by reference to Exhibit 10(k) to the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 1993, File No. 1-4455.
12
EXHIBIT NO. - --------- 10.6 Dole Food Company, Inc. Annual Incentive Plan. Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No. 1-4455. 10.7 Dole Food Company, Inc. Long-Term Incentive Plan. Incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No. 1-4455. 10.8 Dole Food Company, Inc. Executive Deferred Compensation Plan. Incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994. 10.9 Consulting Agreement dated as of July 1, 1996 between the Company and Gerald W. LaFleur. 10.10 The Company's 1996 Non-Employee Directors Deferred Stock and Cash Compensation Plan, as amended March 20, 1997. 10.11 The Company's 1995 Non-Employee Directors Stock Option Plan. Incorporated by reference to Exhibit 4.1 to the Company's Report on Form S-8 filed on June 28, 1995, Registration No. 33-60641. 11 Computations of earnings per common share. 13 Dole Food Company, Inc. 1996 Annual Report for the fiscal year ended December 28, 1996. (This Report is furnished for information of the Commission and, except for those portions thereof which are expressly incorporated by reference herein, is not "filed" as a part of this Annual Report on Form 10-K.) 22 Subsidiaries of Dole Food Company, Inc. 23 Consent of Arthur Andersen LLP. 27 Financial Data Schedules.
(b) Reports on Form 8-K: No current reports on Form 8-K were filed by the Company during the last quarter of the year ended December 28, 1996. 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DOLE FOOD COMPANY, INC. REGISTRANT By: /s/ DAVID H. MURDOCK ----------------------------------------- David H. Murdock CHAIRMAN OF THE BOARD AND March 27, 1997 CHIEF EXECUTIVE OFFICER Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ DAVID H. MURDOCK Chairman of the Board and - ------------------------------ Chief Executive Officer March 27, 1997 David H. Murdock and Director /s/ DAVID A. DELORENZO - ------------------------------ President, Chief Operating March 27, 1997 David A. DeLorenzo Officer and Director /s/ HARVEY J. HEIMBUCH Vice President - - ------------------------------ Controller (Principal March 27, 1997 Harvey J. Heimbuch Accounting Officer) /s/ ELAINE L. CHAO - ------------------------------ Director March 27, 1997 Elaine L. Chao /s/ MIKE CURB - ------------------------------ Director March 27, 1997 Mike Curb /s/ RICHARD M. FERRY - ------------------------------ Director March 27, 1997 Richard M. Ferry /s/ JAMES F. GARY - ------------------------------ Director March 27, 1997 James F. Gary /s/ ZOLTAN MERSZEI - ------------------------------ Director March 27, 1997 Zoltan Merszei 14 INDEX TO EXHIBITS
EXHIBIT NO. PAGE - ----------- --------- 3.1 The Restated Articles of Association of the Company, as amended through July 30, 1991. Incorporated by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 1991, File No. 1-4455.......................................... 3.2 By-Laws of the Company, as amended through March 25, 1993. Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No. 1-4455............................................................................... 4.1 Credit Agreement dated as of July 29, 1996 among the Company, The Chase Manhattan Bank, as Administrative Agent and Lender; Bank of America National Trust & Savings Association, as Syndication Agent and Lender; Citibank, N.A., as Documentation Agent and Lender; and the financial institutions which are Lenders thereunder, relating to the Company's $600 million revolving credit facility. Incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-QA for the quarter ended October 5, 1996, File No.1-4455.................... 4.2 Indenture dated as of April 15, 1993 between the Company and Chemical Trust Company of California, relating to $300 million of the Company's senior notes. Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, event date May 6, 1993, File No. 1-4455........................................................................................ 4.3 Indenture dated as of July 15, 1993 between the Company and Chemical Trust Company of California, relating to $400 million of the Company's senior notes. Incorporated by reference to Exhibit 4 to the Company's Current Report on Form 8-K, event date July 15, 1993, File No. 1-4455........................................................................................ 4.4 The Company agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument with respect to issues of long-term debt of the Company and its subsidiaries, the authorized principal amount of which does not exceed 10% of the consolidated assets of the Company and its subsidiaries..................................................................
15 EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS -- EXHIBITS 10.12-10.11:
EXHIBIT NO. PAGE - ----------- --------- 10.1 The Company's 1991 Stock Option and Award Plan, as amended through January 29, 1997............. 10.2 The Company's 1982 Stock Option and Award Plan, as amended. Incorporated by reference to Exhibit 28(a) to the Company's Report on Form S-8 filed on May 22, 1989, Registration No. 33-28782.... 10.3 Dole Food Company, Inc. Executive Supplementary Retirement Plan (effective January 1, 1989), First Restatement. Incorporated by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 1990, File No. 1-4455..................... 10.4 Bonus Agreement dated as of August 30, 1991 by and between the Company and David A. DeLorenzo, with promissory note dated September 5, 1991 in the principal amount of $500,000 by David A. DeLorenzo in favor of the Company. Incorporated by reference to Exhibit 10(e) to the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 1991, File No. 1-4455....... 10.5 Employment Agreement between the Company and Gerald W. LaFleur. Incorporated by reference to Exhibit 10(k) to the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 1993, File No. 1-4455......................................................................... 10.6 Dole Food Company, Inc. Annual Incentive Plan. Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No. 1-4455........................................................................................ 10.7 Dole Food Company, Inc. Long-Term Incentive Plan. Incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, File No. 1-4455........................................................................................ 10.8 Dole Food Company, Inc. Executive Deferred Compensation Plan. Incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994...................................................................................... 10.9 Consulting Agreement dated as of July 1, 1996 between the Company and Gerald W. LaFleur......... 10.10 The Company's 1996 Non-Employee Directors Deferred Stock and Cash Compensation Plan as amended March 20, 1997................................................................................ 10.11 The Company's Non-Employee Directors Stock Option Plan. Incorporated by reference to Exhibit 4.1 to the Company's Report on Form S-8 filed on June 28, 1995, Registration No. 33-60641......... 11 Computations of earnings per common share....................................................... 13 Dole Food Company, Inc. 1996 Annual Report for the fiscal year ended December 28, 1996. (This Report is furnished for information of the Commission and, except for those portions thereof which are expressly incorporated by reference herein, is not "filed" as a part of this Annual Report on Form 10-K.)......................................................................... 22 Subsidiaries of Dole Food Company, Inc.......................................................... 23 Consent of Arthur Andersen LLP.................................................................. 27 Financial Data Schedule.........................................................................
16 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Shareholders and Board of Directors of Dole Food Company, Inc.: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Dole Food Company, Inc.'s annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated February 6, 1997. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the preceding index is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ ARTHUR ANDERSEN LLP Los Angeles, California March 28, 1997 F-1 SCHEDULE II DOLE FOOD COMPANY, INC. VALUATION AND QUALIFYING ACCOUNTS
ADDITIONS BALANCE AT CHARGED TO BEGINNING COSTS AND BALANCE AT OF YEAR EXPENSES DEDUCTIONS(A) END OF YEAR ----------- ----------- ------------- ----------- (IN THOUSANDS) Year Ended December 28, 1996 Allowance for doubtful accounts Trade receivables........................................ $ 32,329 $ 18,271 $ 9,834 $ 40,766 Notes and other current receivables...................... 14,665 8,992 2,669 20,988 Long-term receivables.................................... 10,399 5,311 2,236 13,474 Year Ended December 30, 1995 Allowance for doubtful accounts Trade receivables........................................ $ 25,034 $ 11,120 $ 3,825 $ 32,329 Notes and other current receivables...................... 10,034 5,588 957 14,665 Long-term receivables.................................... 13,895 2,584 6,080 10,399 Year Ended December 31, 1994 Allowance for doubtful accounts Trade receivables........................................ $ 18,167 $ 10,969 $ 4,102 $ 25,034 Notes and other current receivables...................... 8,654 2,403 1,023 10,034 Long-term receivables.................................... 19,319 5,821 11,245 13,895
Note: (A) Write-off of uncollectible amounts. F-2 EX-10.01 2 1991 STOCK OPTION PLAN DOLE FOOD COMPANY, INC. 1991 STOCK OPTION AND AWARD PLAN (AS AMENDED THROUGH JANUARY 29, 1997) -i- 1991 STOCK OPTION AND AWARD PLAN (AS AMENDED THROUGH JANUARY 29, 1997) TABLE OF CONTENTS I. DEFINITIONS.........................................................1 1.1 Definitions....................................................1 II. GENERAL AND ADMINISTRATIVE PROVISIONS...............................4 2.1 Purpose........................................................4 2.2 Administration.................................................4 2.3 Participation..................................................6 2.4 Stock Subject to this Plan.....................................6 2.5 Grant and Maximum Term of Awards...............................6 2.6 Exercise of Awards.............................................7 III. OPTIONS.............................................................7 3.1 Grants.........................................................7 3.2 Option Price...................................................7 3.3 Option Period..................................................8 3.4 Exercise of Options............................................8 3.5 Limitations on Grant of Incentive Stock Options................8 IV. STOCK APPRECIATION RIGHTS...........................................9 4.1 Grants.........................................................9 4.2 Exercise of Stock Appreciation Rights..........................9 4.3 Payment........................................................10 V. RESTRICTED STOCK AWARDS.............................................10 5.1 Grants.........................................................10 5.2 Restrictions...................................................11 VI. PERFORMANCE SHARE AWARDS............................................11 6.1 Grants.........................................................11 6.2 Section 162(m) Performance-Based Share Awards..................12 -i- VII. OTHER PROVISIONS....................................................13 7.1 Rights of Eligible Employees, Participants and Beneficiaries...13 7.2 Adjustments Upon a Reorganization or Changes in Capitalization.14 7.3 Effect of Termination of Employment............................16 7.4 Acceleration of Awards Upon an Event; Other Changes in Awards..17 7.5 Compliance; Government Regulations.............................17 7.6 Tax Withholding................................................18 7.7 Amendment, Termination and Suspension..........................18 7.8 Privileges of Stock Ownership; Nondistributive Intent..........19 7.9 Effective Date of this Plan....................................19 7.10 Term of this Plan..............................................20 7.11 Governing Law..................................................20 7.12 Limitations as to Executive Officers...........................20 7.13 Captions.......................................................21 7.14 No Fractional Interest.........................................21 7.15 Non-Exclusivity of Plan........................................21 -ii- DOLE FOOD COMPANY, INC. 1991 STOCK OPTION AND AWARD PLAN (as amended through January 29, 1997) I. DEFINITIONS. 1.1 DEFINITIONS. (a) "AWARD" shall mean an Option, which may be designated as a Nonqualified Stock Option or an Incentive Stock Option, a Stock Appreciation Right, a Restricted Stock Award or Performance Share Award, in each case granted under this Plan. (b) "AWARD AGREEMENT" shall mean a written agreement setting forth the terms of an Award. (c) "AWARD DATE" shall mean the date upon which the Committee took the action granting an Award or such later date as is prescribed by the Committee. (d) "AWARD PERIOD" shall mean the period beginning on an Award Date and ending on the expiration date of such Award. (e) "BENEFICIARY" shall mean the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive the benefits specified under this Plan in the event of a Participant's death. (f) "BOARD" shall mean the Board of Directors of the Corporation. (g) "CHANGE IN CONTROL" shall be deemed to have occurred if (a) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any person described in and satisfying the conditions of Rule 13d-1(b)(1) thereunder), other than a person who is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of more than 20% of the outstanding shares of Common Stock at the time of the adoption of this Plan (or any affiliate, successor, heir, descendent or related party of or to any such person), becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 20% or more of the combined voting power of the Corporation's then outstanding securities; or (b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Corporation's stockholders, of each new Board member was approved by a vote of at least three-fourths of the Board members then still in office who were Board members at the beginning of such period. -1- (h) "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time. (i) "COMMISSION" shall mean the Securities and Exchange Commission. (j) "COMMITTEE" shall mean the Corporate Compensation and Benefits Committee appointed by the Board and consisting of two or more Board members, each of whom, during such time as one or more Participants may be subject to Section 16 of the Exchange Act, shall be a Disinterested Director. (k) "COMMON STOCK" shall mean the Common Stock of the Corporation. (l) "COMPANY" shall mean the Corporation and/or its Subsidiaries. (m) "CORPORATION" shall mean Dole Food Company, Inc., a Hawaii corporation, and its successors. (n) [intentionally omitted] (o) "DISINTERESTED DIRECTOR" shall mean a member of the Board who is a Non-Employee Director as defined in Rule 16b-3 and an "outside director" as defined in regulations under Section 162(m) of the Code, as amended from time to time. (p) "ELIGIBLE EMPLOYEE" shall mean an officer or key employee of the Company. (q) "EVENT" shall mean any of the following: (1) Approval by the stockholders of the Corporation of the dissolution or liquidation of the Corporation; (2) Approval by the stockholders of the Corporation of an agreement to merge or consolidate, or otherwise reorganize, with or into one or more entities which are not Subsidiaries, as a result of which less than 50% of the outstanding voting securities of the surviving or resulting entity are, or are to be, owned by former stockholders of the Corporation; (3) Approval by the stockholders of the Corporation of the sale of substantially all of the Corporation's business and/or assets to a person or entity which is not a Subsidiary; or (4) A Change in Control. (r) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended from time to time. -2- (s) "FAIR MARKET VALUE" shall mean the closing price of the stock on the Composite Tape, as published in the Western Edition of The Wall Street Journal, of the principal national securities exchange on which the stock is so listed or admitted to trade, on such date, or, if there is no trading of the stock on such date, then the closing price of the stock as quoted on such Composite Tape on the next preceding date on which there was trading in such shares; provided, however, that if the stock is not listed or admitted to trade on a national securities exchange, the Committee may designate such other exchange, market or source of data as it deems appropriate for determining such value for Plan purposes. (t) "INCENTIVE STOCK OPTION" shall mean an Option which is designated as an incentive stock option within the meaning of Section 422 of the Code, the award of which contains such provisions as are necessary to comply with that section. (u) "NONQUALIFIED STOCK OPTION" shall mean an Option which is designated as a Nonqualified Stock Option. (v) "OPTION" shall mean an option to purchase Common Stock under this Plan. An Option shall be designated by the Committee as a Nonqualified Stock Option or an Incentive Stock Option. (w) "PARTICIPANT" shall mean an Eligible Employee who has been granted an Award. (x) "PERFORMANCE SHARE AWARD" shall mean an award of shares of Common Stock, issuance of which is contingent upon attainment of performance objectives specified by the Committee, and the vesting of which may be subject to other restrictions, or an award of shares as a bonus for achievement of objectives or otherwise exceptional individual performance or business results. (y) "PERSONAL REPRESENTATIVE" shall mean the person or persons who, upon the disability or incompetence of a Participant, shall have acquired on behalf of the Participant, by legal proceeding or otherwise, the power to exercise the rights and receive the benefits specified in this Plan. (z) "PLAN" shall mean the Dole Food Company, Inc. 1991 Stock Option and Award Plan, as amended. (aa) "QDRO" shall mean an order requiring the transfer of an Award or portion thereof pursuant to a state domestic relations law to the spouse, former spouse, child or other dependent of a Participant. (bb) "RESTRICTED STOCK" shall mean those shares of Common Stock issued pursuant to a Restricted Stock Award which are subject to the restrictions set forth in the related Award Agreement. 3 (cc) "RESTRICTED STOCK AWARD" shall mean an award of a fixed number of shares of Common Stock to the Participant subject, however, to payment of such consideration, if any, and such forfeiture provisions, as are set forth in the Award Agreement. (dd) "RETIREMENT" shall mean retirement from active service as an employee or officer of the Company on or after obtaining age 55 with ten or more years of service or age 65. (ee) "RULE 16b-3" shall mean Rule 16b-3 promulgated by the Commission pursuant to the Exchange Act effective November 1, 1996, or any successor provision, as amended from time to time. (ff) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended from time to time. (gg) "STOCK APPRECIATION RIGHT" shall mean a right to receive a number of shares of Common Stock or an amount of cash, or a combination of shares and cash, determined as provided in Section 4.3. (hh) "SUBSIDIARY" shall mean any corporation or other entity a majority or more of the outstanding voting stock or voting power of which is beneficially owned directly or indirectly by the Corporation. (ii) "TOTAL DISABILITY" shall mean a "permanent and total disability" within the meaning of Section 22(e)(3) of the Code. II. GENERAL AND ADMINISTRATIVE PROVISIONS. 2.1 PURPOSE. The purpose of this Plan is to promote the success of the Company and the interest of its stockholders by providing a means to attract and retain key employees by providing them long-term incentives to improve the financial performance of the Company. 2.2 ADMINISTRATION. (a) COMMITTEE. This Plan shall be administered by and Awards shall be authorized by the Committee. Action of the Committee with respect to the administration of this Plan shall be taken pursuant to a majority vote or by the unanimous written consent of its members. If action by the Committee is taken by written consent, the action shall be deemed to have been taken at the time specified in the consent or, if none is specified, at the time of the last signature. The Committee 4 may delegate administrative functions to individuals who are officers or employees of the Company. (b) PLAN AWARDS; INTERPRETATION; POWERS OF THE COMMITTEE. Subject to the express provisions of this Plan, the Committee shall have the authority to construe and interpret this Plan and any agreements defining the rights and obligations of the Company and Participants under this Plan; to further define the terms used in this Plan; to prescribe, amend and rescind rules and regulations relating to the administration of this Plan; to determine the duration and purposes of leaves of absence which may be granted to Participants without constituting a termination of their employment for purposes of this Plan; to determine who is an Eligible Employee and the particular Eligible Employees who will receive Awards; to grant Awards to Eligible Employees, determine the price at which securities will be offered or awarded and the amount of securities to be offered or awarded; to determine the other specific terms and conditions of such Awards, including performance criteria and goals, consistent with the express limits of this Plan, establish the installments (if any) in which such Awards shall become exercisable or shall vest, or determine that no delayed exercisability or vesting is required, and establish the events of termination or reversion of such Awards; to approve the forms of Award Agreements (which need not be identical either as to type of award or among Participants); to cancel, modify, or waive the Corporation's rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding Awards held by Eligible Employees, subject to any required consent under Section 7.7; to accelerate or extend the exercisability or extend the term of any or all such outstanding Awards within the maximum ten-year term of Awards under Section 2.5; and to make all other determinations necessary or advisable for the administration of this Plan. The determinations of the Committee on the foregoing matters shall be conclusive. (c) BINDING DECISIONS. Any action taken by, or inaction of, the Corporation, any Subsidiary, the Board or the Committee relating to this Plan shall be within the absolute discretion of that entity or body and shall be conclusive and binding upon all persons. No member of the Board or Committee, or officer of the Corporation or Subsidiary, shall be liable for any such action or inaction of the entity or body, of another person or, except in circumstances involving bad faith, of himself or herself. Subject only to compliance with the express provisions hereof, the Board and Committee may act in their absolute discretion in matters related to this Plan. In making any determination or in taking or not taking any action under this Plan, the Committee or the Board, as the case may be, may obtain and may rely upon the advice of experts, including professional advisors to the Corporation. No director, officer or agent of the Company shall be liable for any such action or determination taken or made or omitted in good faith. (d) CHANGES TO COMMITTEE. Subject to the requirements of Section 1.1(j), the Board, at any time it so desires, may increase or decrease the number of members of the Committee, may remove from membership on the Committee all or any 5 portion of its members, and may appoint such person or persons as it desires to fill any vacancy existing on the Committee, whether caused by removal, resignation or otherwise. 2.3 PARTICIPATION. Awards may be granted only to Eligible Employees. An Eligible Employee who has been granted an Award may, if otherwise eligible, be granted additional Awards if the Committee shall so determine. Members of the Board who are not officers or employees of the Company, and members of the Committee, shall not be eligible to receive Awards. 2.4 STOCK SUBJECT TO THIS PLAN. (a) AVAILABLE SHARES. The stock to be offered under this Plan shall be shares of the Corporation's authorized but unissued Common Stock. The maximum number of shares of Common Stock that may be issued pursuant to Awards granted under this Plan shall not exceed the sum of 5,000,000 shares, subject to adjustments (including the adjustments for the distribution of shares of Castle & Cooke, Inc. in December 1995) as set forth in Section 7.2. If any Option and any related Stock Appreciation Right shall lapse or terminate without having been exercised in full, or any Common Stock subject to a Restricted Stock Award which does not vest or any Common Stock subject to a Performance Share Award which has not been issued or become issuable, the unpurchased or unvested shares subject thereto shall again be available for reissue for purposes of this Plan. (b) INDIVIDUAL MAXIMUM. The maximum number of shares subject to Options or Stock Appreciation Rights that during any calendar year are granted to any one person shall be limited to 500,000 and the maximum number of shares in the aggregate subject to all Awards that during any calendar year are granted to any individual under this Plan shall be 750,000. Tandem or alternative Awards shall be counted only once for these purposes, unless otherwise required by Section 162(m). Any Awards that are cancelled or repriced during the year shall be counted against this limit, to the extent required by Section 162(m). (c) ADJUSTMENTS. Each of the foregoing numerical limits in this Section 2.4 shall be subject to adjustments as contemplated by this Section 2.4 and Section 7.2. 2.5 GRANT AND MAXIMUM TERM OF AWARDS. Subject to the express provisions of this Plan, the Committee has the authority to grant Awards. The grant of an Award is made on the Award Date. The maximum term of an Award is 10 years. 2.6 EXERCISE OF AWARDS. 6 An Option or Stock Appreciation Right shall be deemed to be exercised when the Corporation receives written notice of such exercise from the Participant, together with payment of the purchase price made in accordance with Section 3.2, except as may be necessary or advisable to be made following delivery of written notice of exercise in accordance with Section 3.2. III. OPTIONS. 3.1 GRANTS. One or more Options may be granted to any Eligible Employee. Each Option so granted shall be designated in the applicable Award Agreement by the Committee as either a Nonqualified Stock Option or an Incentive Stock Option. 3.2 OPTION PRICE. (a) MINIMUM PRICE. The purchase price per share of the Common Stock covered by each Option shall be determined by the Committee, but in the case of Incentive Stock Options shall not be less than 100% (110% in the case of a Participant who owns more than 10% of the total combined voting power of all classes of stock of the Company) of the Fair Market Value of the Common Stock on the date the Incentive Stock Option is granted. The purchase price of any shares purchased shall be paid in full at the time of each purchase in one or a combination of the following methods: (i) in cash, by electronic funds transfer, or by certified or cashier's check payable to the order of the Corporation; (ii) if authorized by the Committee or specified in the applicable Award Agreement, by a promissory note of the Participant consistent with the requirements of Section 7.5; or (iii) by delivery of shares of Common Stock of the Corporation already owned by the Participant; provided, however, the Committee may in its absolute discretion limit the Participant's ability to exercise an Option by delivering shares, and (without limiting the generality of the foregoing) any shares delivered which were initially acquired upon exercise of a stock option must have been owned by the Participant at least six months as of the date of delivery. Shares of Common Stock used to satisfy the exercise price of an Option shall be valued at their Fair Market Value on the date of exercise. (b) CASHLESS EXERCISE. In addition to the payment methods described in Section 3.2(a), the Option (or the Committee) may provide that the Option can be exercised and payment made by delivering a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Corporation the amount of sale proceeds necessary to pay the exercise price and, unless otherwise disallowed by the Committee, any applicable tax withholding under Section 7.6. The Corporation shall not be obligated to deliver certificates for the shares unless and until it receives full payment of the exercise price therefor and any related withholding obligations have been satisfied. 7 3.3 OPTION PERIOD. Each Option and all rights or obligations thereunder shall expire on such date as shall be determined by the Committee, but not later than 10 years after the Award Date, and shall be subject to earlier termination as provided in or pursuant to Section 7.2 or 7.3. 3.4 EXERCISE OF OPTIONS. Except as otherwise provided in or pursuant to Sections 7.2, 7.3 and 7.4, an Option may become exercisable, in whole or in part, on the date or dates specified in the Award Agreement and thereafter shall remain exercisable until the expiration or earlier termination of the Option. No shares issuable upon exercise of an Option shall be exercisable until at least six months after the Award Date. The Committee may, at any time after grant of the Option and from time to time, increase the number of shares purchasable at any time so long as the total number of shares subject to the Option is not increased. No Option shall be exercisable except in respect of whole shares. Not less than 100 shares of Common Stock may be purchased at one time unless the number purchased is the total number at the time available for purchase under the terms of the Option. 3.5 LIMITATIONS ON GRANT OF INCENTIVE STOCK OPTIONS. (a) $100,000 LIMIT. To the extent that the aggregate Fair Market Value of stock with respect to which incentive stock options first become exercisable by a Participant in any calendar year exceeds $100,000, taking into account both Common Stock subject to Incentive Stock Options under this Plan and stock subject to incentive stock options under all other plans of the Company, such options shall be treated as nonqualified stock options. For purposes of determining whether the $100,000 limit is exceeded, the Fair Market Value of stock subject to options shall be determined as of the date the options are awarded. In reducing the number of options treated as incentive stock options to meet the $100,000 limit, the most recently granted options shall be reduced first. To the extent a reduction of simultaneously granted options is necessary to meet the $100,000 limit, the Corporation may, in the manner and to the extent permitted by law, designate which shares of Common Stock are to be treated as shares acquired pursuant to the exercise of an Incentive Stock Option under this Plan. (b) OTHER TERMS. There shall be imposed in any Award Agreement relating to Incentive Stock Options such terms and conditions as are required in order that the Option be an "incentive stock option" as that term is defined in Section 422 of the Code. (c) 10% OWNERS. No Incentive Stock Option may be granted to any person who, at the time the Incentive Stock Option is granted, owns (or is deemed to own) shares of outstanding Common Stock possessing more than 10% of the total combined -8- voting power of all classes of Common Stock of the Company, unless the exercise price of such Option is at least 110% of the Fair Market Value of the Common Stock subject to the Option and such Option by its terms is not exercisable after the expiration of five years from the date such Option is granted. IV. STOCK APPRECIATION RIGHTS. 4.1 GRANTS. In its discretion, the Committee may grant Stock Appreciation Rights concurrently with the grant of Options or thereafter with respect to an outstanding Option, on such terms as set forth by the Committee in the Award Agreement for such Option, including in circumstances involving a Change in Control or other Event or a termination of employment, or in anticipation thereof. A Stock Appreciation Right shall extend to all or a portion of the shares covered by the related Option. A Stock Appreciation Right shall entitle the Participant who holds the related Option, upon exercise of the Stock Appreciation Right and surrender of the related Option, or portion thereof, to the extent the Stock Appreciation Right and related Option each were previously unexercised, to receive payment of an amount determined pursuant to Section 4.3. Any Stock Appreciation Right granted in connection with an Incentive Stock Option shall contain such terms as may be required to comply with the provisions of Section 422 of the Code and the regulations promulgated thereunder. 4.2 EXERCISE OF STOCK APPRECIATION RIGHTS. (a) TIME/VALUE. A Stock Appreciation Right shall be exercisable only at such time or times, and to the extent, that the related Option shall be exercisable and only when the Fair Market Value of the stock subject to the related Option exceeds the Option price of the related Option. (b) SHARE ACCOUNTING. In the event that a Stock Appreciation Right is exercised, the number of shares of Common Stock subject to the related Option shall be charged against the maximum amount of Common Stock that may be issued or transferred pursuant to Awards under this Plan. The number of shares subject to the Stock Appreciation Right and the related Option of the Participant shall also be reduced by such number of shares. (c) ADJUSTMENTS. If a Stock Appreciation Right extends to less than all the shares covered by the related Option and if a portion of the related Option is thereafter exercised, the number of shares subject to the unexercised Stock Appreciation Right shall be reduced only if and to the extent that the remaining number of shares covered by such related Option is less than the remaining number of shares subject to such Stock Appreciation Right. -9- 4.3 PAYMENT. (a) AMOUNT. Upon exercise of a Stock Appreciation Right and surrender of an exercisable portion of the related Option, the Participant shall be entitled to receive payment of an amount determined by multiplying: (i) the difference obtained by subtracting the Option price per share of Common Stock under the related Option from the Fair Market Value of a share of Common Stock on the date of exercise of the Stock Appreciation Right, by (ii) the number of shares with respect to which the Stock Appreciation Right shall have been exercised. (b) FORM. The Committee, in its sole discretion, may provide for payment upon exercise under Section 4.3(a) to be solely in cash, solely in shares of Common Stock (valued at Fair Market Value on the date of exercise of the Stock Appreciation Right), or partly in such shares and partly in cash, or may leave the election to the Participant, subject to any applicable legal requirements. Absent a determination to the contrary by the Committee, all Stock Appreciation Rights shall be settled in cash as soon as practicable after exercise. The exercise price for the Stock Appreciation Right shall be the exercise price of the related Option. (c) VARIANCE. Notwithstanding the foregoing, the Committee may, in the Award Agreement, determine the specific form of payment or may provide for a different specified amount of cash or stock or a combination thereof to be delivered upon exercise of a Stock Appreciation Right. V. RESTRICTED STOCK AWARDS. 5.1 GRANTS. Subject to Section 2.4, the Committee may, in its discretion, grant one or more Restricted Stock Awards to any Eligible Employee. Each Restricted Stock Award Agreement shall specify the number of shares of Common Stock to be issued to the Participant, the date of such issuance, the price, if any, to be paid for such shares by the Participant and the restrictions imposed on such shares, which restrictions shall not terminate earlier than six months after the Award Date. -10- 5.2 RESTRICTIONS. Unless the Committee otherwise expressly provides in the Award Agreement, during the restricted period Restricted Stock Awards shall be subject to the following restrictions: (a) the shares may not be sold, assigned, transferred, pledged or otherwise disposed of or encumbered, either voluntarily or involuntarily, until such shares have vested; (b) the holder shall have voting rights but shall not be entitled to dividends in respect of the restricted shares until they have vested, at which time accrued and paid dividends on such shares shall also vest; (c) any cash paid by a holder to acquire restricted shares shall be returned to the holder, without interest, if the restricted shares do not vest; and (d) shares of Restricted Stock (and any related dividends) that are subject to restrictions at the time of termination of employment, or are subject to other conditions to vesting that have not been satisfied by the time specified in the applicable Award Agreement, shall not vest and shall be returned to the Corporation. VI. PERFORMANCE SHARE AWARDS. 6.1 GRANTS. The Committee may, in its discretion, grant Performance Share Awards to Eligible Employees based upon: the appreciation in the Fair Market Value, book value or other measure of value of the Common Stock; the performance of the Company based on earnings or cash flow; or such other factors as the Committee shall determine. In making such determinations, the Committee shall consider (among other factors deemed relevant to the specific award type), the Eligible Employee's contributions to the Company, responsibilities and other compensation. A Performance Share Award Agreement shall specify the number of shares of Common Stock subject to the Performance Share Award, the price, if any, to be paid for such shares by the Participant and the required amount of appreciation in the Fair Market Value, book value or other measure of value of Common Stock, the required amount of change in the performance of the company based on earnings or cash flow of the Company or specified Subsidiary or other factors and other conditions determined by the Committee upon which issuance to the Participant shall be based, which issuance shall not be less than six months after the Award Date. To the extent a Performance Share Award constitutes an equity security (as this phrase is defined in Rule 16a-1 under the Exchange Act) issued by the Corporation and is paid in shares of Common Stock or cash, the number of shares of Common Stock subject to such Performance Share Award -11- shall be charged against the maximum amount of Common Stock that may be issued pursuant to Awards under this Plan. 6.2 SECTION 162(m) PERFORMANCE-BASED SHARE AWARDS. Without limiting the generality of the foregoing, and in addition to awards granted under other provisions of this Plan, other performance-based awards within the meaning of Section 162(m) of the Code ("PERFORMANCE-BASED AWARDS"), whether in the form of restricted stock, performance stock, phantom stock or other rights, the vesting of which depends on the performance of the Company on a consolidated, segment, subsidiary or division basis with reference to net earnings (before or after tax), cash flow, return on equity or on assets or on net investment, or cost containment or reduction, or any combination thereof (the "performance criteria") relative to preestablished performance goals, may be granted under this Plan. The applicable business criteria and specific performance goal or goals ("targets") must be approved by the Committee in advance of any applicable deadline under the Code and while the performance relating to such targets remains substantially uncertain. The applicable performance measurement period may be not less than one nor more than ten years. Performance targets may be adjusted to mitigate the unbudgeted impact of material, unusual or nonrecurring gains and losses, accounting changes or other extraordinary events not foreseen at the time the targets were set. (a) ELIGIBLE CLASS. The eligible class of persons for Awards under this Section 6.2 shall be executive officers of the Company. (b) MAXIMUM AWARD. In no event shall grants made in any calendar year to any one person under this Section 6.2 relate to more than 500,000 shares or a cash amount of more than $10 million. (c) COMMITTEE CERTIFICATION. Before any Performance-Based Award under this Section 6.2 is paid, the Committee must certify that the material terms of the Performance-Based Award were satisfied. (d) TERMS AND CONDITIONS OF AWARDS. The Committee will have discretion to determine the restrictions or other limitations of the individual Awards under this Section 6.2, including the authority to reduce Awards, payouts or vesting or to pay no Awards, in its sole discretion, IF the Committee preserves such authority at the time of grant by language to this effect in its authorizing resolutions or otherwise. -12- VII. OTHER PROVISIONS. 7.1 RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES. (a) NO AWARD COMMITMENT. Status as an Eligible Employee shall not be construed as a commitment that any Award will be made under this Plan to an Eligible Employee or to Eligible Employees generally. (b) NO EMPLOYMENT COMMITMENT. Nothing contained in this Plan (or in Award Agreements or in any other documents related to this Plan or to Awards) shall confer upon any Eligible Employee or Participant any right to continue in the employ of the Company or constitute any contract or agreement of employment, or interfere in any way with the right of the Company to reduce such person's compensation or other benefits or to terminate the employment of such Eligible Employee or Participant, with or without cause, but nothing contained in this Plan or any document related thereto shall affect any other contractual right of any Eligible Employee or Participant. (c) NO TRANSFER OF AWARDS. (i) LIMIT ON EXERCISE. Except as provided herein and subject to Section 7.12, Awards may be exercised only by, and amounts payable or shares issuable pursuant to an Award shall be paid only to (or for the account of), the Participant or, if the Participant has died, the Participant's Beneficiary or, if the Participant has suffered a Disability, the Participant's Personal Representative, if any, or if there is none, the Participant. Subject to Sections 7.1(c)(ii), 7.5 and 7.12, the Committee may by express written authorization permit exercise by and payment to certain persons or entities related to the Participant who are permitted transferees of the Participant without consideration, or such other persons as the Committee deems appropriate, pursuant to such conditions and procedures as the Committee in writing may establish and set forth in or by amendment to an Award Agreement. (ii) LIMIT ON TRANSFER. No option, right or other Award granted under this Plan including, without limitation, any undistributed performance share or share of Restricted Stock that has not vested, shall be transferrable by the Participant or shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge (other than to the Corporation), except (i) by will or the laws of descent and distribution, or (ii) pursuant to any other exception to transfer restrictions expressly permitted by the Committee and set forth in the Award Agreement (or an amendment thereto), and (iii) in the case of Awards comprising Incentive Stock Options, as permitted by the Code. Any attempted transfer in violation of these provisions shall be void and shall be disregarded. 13 (c) DESIGNATION OF BENEFICIARY. The designation of a Beneficiary shall not constitute a transfer prohibited by the foregoing provisions. (d) PLAN NOT FUNDED. Awards payable under this Plan shall be payable in shares or from the general assets of the Corporation, and no special or separate reserve, fund or deposit shall be made to assure payment of such Awards. No Participant, Beneficiary or other person shall have any right, title or interest in any fund or in any specific asset (including shares of Common Stock) of the Company by reason of any Award granted hereunder. Neither the provisions of this Plan (or of any documents related hereto), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between the Company and any Participant, Beneficiary or other person. To the extent that a Participant, Beneficiary or other person acquires any rights in respect of an Award hereunder, such rights shall be no greater than the rights of any unsecured general creditor of the Company. 7.2 ADJUSTMENTS UPON A REORGANIZATION OR CHANGES IN CAPITALIZATION. (a) GENERAL. If the outstanding shares of Common Stock are changed into or exchanged for cash or a different number or kind of shares, securities, or other property, or if additional shares or new or different securities or, other property are distributed with respect to the outstanding shares of the Common Stock, through a merger, combination, consolidation, or other reorganization or a recapitalization, reclassification, stock split, stock dividend, reverse stock split, stock consolidation, dividend or distribution of property to the stockholders of the Corporation which in the judgment of the Committee materially affects the value of the Common Stock, or if some other capital change or adjustment affecting the Common Stock shall be made, the Committee shall in such manner and to such extent as it deems an appropriate, equitable, and proportionate adjustment to the number and kind of securities, obligations or other consideration (including cash of other property) that is subject to or may be delivered under this Plan and pursuant to outstanding Awards and in any applicable performance standards and (if applicable) subsequent Awards, subject (i) in the case of a transaction that the Corporation does not survive as a legal entity to any required approval of the surviving or successor entity (or a parent or subsidiary thereof); (ii) in the case of a transaction to be accounted for as a pooling of interests, to any applicable limitations under generally accepted accounting principles; and (iii) to the provisions of Section 7.4 below. A corresponding adjustment to the consideration payable with respect to Awards granted prior to any such change and to the price, if any, to be paid in connection with Restricted Stock Awards or Performance Share Awards shall also be made. Corresponding adjustments shall be made with respect to Stock Appreciation Rights related to Options based upon the adjustments made to the Options to which they are related. Further, in the case of an extraordinary dividend or other distribution, recapitalization, reclassification, reorganization, merger, consolidation, combination, sale of assets, split up, exchange, or spin off, the Committee may make provision for a cash 14 payment or for the substitution or exchange of any or all outstanding Awards or the cash, securities, or property deliverable to the holder of any or all outstanding Awards based upon the distribution or consideration payable to holders of the Common Stock of the Corporation upon or in respect of such event; provided, however, in each case, that with respect to Awards of Incentive Stock Options, no such adjustment shall be made which would cause the Plan to violate Section 424(a) of the Code or any successor provisions thereto without the written consent of holders materially adversely affected thereby. In any of such events, the Committee may take such action sufficiently prior to such event if it deems such action necessary or appropriate to permit the Participant to realize the benefits intended to be conveyed with respect to the underlying shares in the same manner as is or will be available to stockholders generally. (b) SECTION 16 DEFERRAL. Adjustments to Awards granted to Participants may be suspended or deferred for so long as the Committee determines that such adjustments adversely affect the ability of persons subject to the reporting and liability provisions of Section 16 of the Exchange Act to avoid liability under Section 16 of the Exchange Act. (c) ASSUMPTION; SUBSTITUTION; OTHER SETTLEMENT ADJUSTMENTS. Whether or not an Award is vested at the time of an Event, the Committee, prior to the Event but subject to any applicable limitations (in the case of a transaction to be accounted for as a pooling of interests) under generally accepted accounting principles, may in its discretion further provide in respect of any or all outstanding Awards: (i) for the assumption of the outstanding Awards by a successor entity, or a parent or subsidiary thereof, with appropriate adjustments to the type of securities or property to be delivered, or (ii) for the substitution for the outstanding Awards of new Awards covering securities, obligations or consideration (including cash or other property), or any combination thereof, of or from the Corporation or a successor entity, or a parent or subsidiary thereof, in either case with appropriate, proportionate, equitable adjustments as to number and kind of securities, obligations and/or other consideration deliverable in respect of the vesting or on exercise of an Award and the applicable exercise or other prices and conditions in respect thereof; or (iii) for the payment of the fair value of the outstanding Awards in complete settlement of all rights of the Participant thereunder; and (iv) if such provision is made under this Section 7.2(c), the Committee as constituted prior to the Event also may terminate the original Award upon such assumption, substitution or payment. 15 (d) OTHER BENEFITS. In addition, the Committee may grant such additional rights in the foregoing circumstances as the Committee deems to be in the best interest of the Participants and the Corporation in order to preserve for the Participants the benefits of their Awards. (e) RELIANCE. In adjusting Awards to reflect the changes described in this Section 7.2, or in determining that no such adjustment is necessary, the Committee may rely upon the advice of independent counsel and accountants of the Corporation, and the determination of the Committee shall be conclusive. 7.3 EFFECT OF TERMINATION OF EMPLOYMENT. Unless the Committee otherwise expressly provides in or by amendment to the Award Agreement: (a) OPTIONS--RESIGNATION; DISMISSAL WITHOUT CAUSE. If the Participant's employment by the Company terminates for any reason other than Retirement, Total Disability or death, the Participant shall have, subject to earlier termination pursuant to or as contemplated by Section 3.3, three months from the date of termination of employment to exercise any Option to the extent it shall have become exercisable on the date of termination of employment, and any Option to the extent not exercisable on that date shall terminate. (b) OPTIONS--RETIREMENT, DISABILITY OR DEATH. If the Participant's employment by the Company terminates as a result of Retirement, Total Disability, or death, the Participant or Participant's Personal Representative or his or her Beneficiary, as the case may be, shall have, subject to earlier termination pursuant to or as contemplated by Section 3.3, 12 months from the date of termination of employment to exercise any Option to the extent it shall have become exercisable by the date of termination of employment, and any Option to the extent not exercisable on that date shall terminate. (c) SARS. Each Stock Appreciation Right granted concurrently with an Option shall have the same termination provisions and exercisability periods as the Option to which it relates. The exercisability period of a Stock Appreciation Right shall not exceed that provided in Section 3.3 or in the related Award Agreement and the Stock Appreciation Right shall expire at the end of such exercisability period. (d) RESTRICTED AND PERFORMANCE SHARES. In the event of a termination of employment with the Company for any reason, (i) shares of Common Stock subject to the Participant's Restricted Stock Award shall be forfeited in accordance with the provisions of the related Award Agreement to the extent such shares have not become vested on that date; and (ii) shares of Common Stock subject to the Participant's Performance Share Award shall be forfeited in accordance with the 16 provisions of the related Award Agreement to the extent such shares have not been issued or become issuable on that date. (e) ADJUSTMENT. In the event or in anticipation of a termination of employment with the Company for any reason, other than discharge for cause, the Committee may, in its discretion (subject to the provisions of Sections 2.5, 3.4, 5.1 and 6.1 and 7.5, 7.7 and 7.12) accelerate exercisability or vesting or extend the exercisability or vesting period of an Award, or make other changes to or provide for alternative settlement of an Award. (f) CHANGE IN OWNERSHIP OF SUBSIDIARY. If an entity ceases to be a Subsidiary, such action shall be deemed for purposes of this Section 7.3 to be a termination of employment of each employee of that entity who does not continue as an employee of another entity within the Company. 7.4 ACCELERATION OF AWARDS UPON AN EVENT; OTHER CHANGES IN AWARDS. Unless prior to an Event the Committee determines that, upon its occurrence, there shall be no acceleration of Awards or determines those Awards which shall be accelerated and the extent to which they shall be accelerated, upon the occurrence of an Event (i) each Option and each related Stock Appreciation Right shall become immediately exercisable to the full extent theretofore not exercisable, (ii) Restricted Stock shall immediately vest free of restrictions, and (iii) the number of shares covered by each Performance Share Award shall be issued to the Participant. Acceleration of Awards shall comply with applicable regulatory requirements, including without limitation Rule 16b-3 and Section 422 of the Code. 7.5 COMPLIANCE; GOVERNMENT REGULATIONS. This Plan, the granting and vesting of Awards under this Plan and the offer, issuance or delivery of shares of Common Stock (and/or the payment of money or other property or securities) pursuant to this Plan or Awards are subject to compliance with all applicable federal and state laws, rules and regulations and to such approvals by any listing, regulatory or governmental agency (including without limitation "no action" positions of the Commission) as may, in the opinion of counsel for the Corporation, be necessary or advisable in connection therewith. In connection with any stock issuance or transfer, the person acquiring the shares shall, if requested by the Corporation, give assurances satisfactory to counsel to the Corporation in respect of such matters as the Corporation may deem necessary or desirable to assure compliance with all applicable legal requirements. 17 7.6 TAX WITHHOLDING. Upon the disposition by a Participant or other person of shares of Common Stock acquired pursuant to the exercise of an Incentive Stock Option prior to satisfaction of the holding period requirements of Section 422 of the Code, or upon the exercise of a Nonqualified Stock Option, the exercise of a Stock Appreciation Right, the vesting of a Restricted Stock Award, or the payment of a Performance Share Award, the Company shall have the right to (i) require such Participant or such other person to pay by cash, or certified or cashier's check payable to the Company, the amount of any taxes which the Company may be required to withhold with respect to such transaction or (ii) deduct from amounts paid in cash the amount of any taxes which the Company may be required to withhold with respect to such cash amounts. The above notwithstanding, in any case where a tax is required to be withheld in connection with the issuance, transfer or vesting of shares of Common Stock under this Plan, the Participant may elect, pursuant to such rules and subject to such conditions as the Committee may establish (which conditions may require its specific approval, on a case-by-case basis), to have the Company reduce the number of such shares issued or transferred by the appropriate number of shares to accomplish such withholding. The Committee may impose conditions on the payment of any withholding obligation necessary in the case of persons subject to the reporting and liability provisions of Section 16 of the Exchange Act to enable them to avoid liability under Section 16 of the Exchange Act or to secure the benefits otherwise available under any applicable exemptive or other rule thereunder with respect to a "plan" or particular award or action related thereto. In any event, the Corporation shall not be obligated to issue or deliver shares and/or distribute cash to the Participant upon exercise or vesting of any Award, unless such withholding (or offset) as of or prior to the date of such issue or delivery is sufficient to cover all such sums due or which may be due with respect to such exercise or vesting. 7.7 AMENDMENT, TERMINATION AND SUSPENSION. (a) PLAN CHANGES. The Board may, at any time, terminate or, from time to time, amend, modify or suspend this Plan (or any part hereof), including without limitation, amendments or modifications as may be necessary to enable Participants to avoid liability under Section 16 of the Exchange Act or to secure the benefits otherwise available under any applicable exemptive or other rule thereunder with respect to a "plan" or particular award or action related thereto. In addition, the Committee may, from time to time, amend or modify any provision of this Plan, except Section 7.2 or 7.4. No Awards may be granted during any suspension of this Plan or after its termination, but the Committee shall retain jurisdiction hereunder in respect of Awards granted prior thereto and may consistent with the terms hereof modify such Awards unless the Board otherwise provides. (b) CHANGES TO OUTSTANDING AWARDS. The Committee may, with the consent of the Participant, as to any adverse change make such modifications of the 18 terms and conditions of such Participant's Award as it shall deem advisable. The Committee, with the consent of the Participant, may also amend the terms of any Option to provide that the purchase price under the Option of the shares remaining subject to the original Award shall be reestablished at a price not less than 100% of the Fair Market Value of the Common Stock on the effective date of the amendment. No modification of any other term or provision of any Option which is amended in accordance with the foregoing shall be required, although the Committee may, in its discretion, make such further modifications of any such Option as are not inconsistent with or prohibited by this Plan. Changes pursuant to Section 7.2 or 7.4 are not limited by or subject to this Section 7.7(b). (c) STOCKHOLDER APPROVAL. If an amendment would (i) materially increase the benefits accruing to Participants under this Plan, (ii) materially increase the aggregate number of securities which may be issued under this Plan, or (iii) materially modify the requirements of eligibility for participation in this Plan, the amendment shall be approved by the Board and, to the extent then required by Section 424 of the Code or as may be necessary or desirable to avoid liability under Section 16 of the Exchange Act or to secure the benefits otherwise available under any applicable exemptive or other rule thereunder with respect to a "plan" or particular award or action related thereto or required by any other applicable law, or any successor provision thereto, by the requisite number of stockholders. (d) EFFECT OF PLAN AMENDMENT ON OUTSTANDING AWARD. Any amendment, suspension or termination of this Plan shall not, without specific action of the Board or the Committee and the consent of the Participant as to any adverse change, in any way modify, amend, alter or impair any rights or obligations under any Award previously granted under this Plan. 7.8 PRIVILEGES OF STOCK OWNERSHIP; NONDISTRIBUTIVE INTENT. A Participant shall not be entitled to the privilege of stock ownership as to any shares of Common Stock not actually issued to him or her. Upon the issuance and transfer of shares to the Participant, unless a registration statement is in effect under the Securities Act and applicable state securities law relating to such issued and transferred Common Stock and there is available for delivery a prospectus meeting the requirements of Section 10 of the Securities Act, the Common Stock may be issued and transferred to the Participant only if he or she represents and warrants in writing to the Corporation that the shares are being acquired for investment and not with a view to the resale or distribution thereof. 7.9 EFFECTIVE DATE OF THIS PLAN. The effective date of this Plan was May 15, 1991. Material amendments to this Plan effective February 1, 1996, were approved by the stockholders of the Corporation at annual meeting on May 9, 1996. Amendments effective January 29, 1997 were 19 approved by the Committee and did not require stockholder approval nor did they adversely affect any award holder's rights or benefits under this Plan. 7.10 TERM OF THIS PLAN. Unless previously terminated by the Board, this Plan shall terminate at the close of business on May 14, 2001, and no Awards shall be granted under it thereafter, but such termination shall not affect any Award theretofore granted or the authority of the Committee with respect to Awards then outstanding. 7.11 GOVERNING LAW. This Plan and the documents evidencing Awards and all other related documents shall be governed by, and construed in accordance with, the laws of the State of California. If any provision shall be held by a court of competent jurisdiction to be invalid and unenforceable, the remaining provisions of this Plan shall continue to be fully effective. 7.12 LIMITATIONS AS TO EXECUTIVE OFFICERS. (a) RULE 16b-3; BIFURCATION. It is the intent of the Corporation that transactions or events in respect of Awards hereunder satisfy and be interpreted in a manner that in the case of Participants who are or may be subject to Section 16 of the Exchange Act satisfies the applicable requirements of Rule 16b-3 so that such persons (unless they otherwise agree) will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Exchange Act and will not be subjected to avoidable liability there-under. If any provision of this Plan or of any Award would otherwise frustrate or conflict with the intent expressed above, that provision to the extent possible shall be interpreted and deemed amended so as to avoid such conflict. Notwithstanding anything to the contrary in this Plan, the provisions of this Plan may at any time be bifurcated by the Board or the Committee in any manner so that certain provisions of any Award Agreement (or this Plan) intended (or required in order) to satisfy the applicable requirements of Rule 16b-3 are only applicable to Section 16 Persons and to those Awards to Section 16 Persons intended to satisfy the requirements of Rule 16b-3. (b) SECTION 162(m). It is the further intent of the Corporation that Options or SARs with an exercise or base price not less than Fair Market Value on the date of grant and performance awards under Section 6.2 of this Plan that are granted to or held by a Section 16 Person shall (if so designated by the Committee) qualify as performance-based compensation under Section 162(m) of the Code, and this Plan shall be interpreted consistent with such intent. 20 7.13 CAPTIONS. Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof. 7.14 NO FRACTIONAL INTEREST. No fractional shares of stock shall be issued under this Plan, but fractional interests may be accumulated or paid in cash. 7.15 NON-EXCLUSIVITY OF PLAN. Nothing in this Plan shall limit or be deemed to limit the authority of the Board or the Committee to grant awards or authorize any other compensation, with or without reference to the Common Stock, under any other plan or authority. 21 EX-10.9 3 CONSULTING CVR CONSULTING AGREEMENT This Consulting Agreement (this "Agreement") is effective as of July 1, 1996 between Dole Food Company, Inc., a Hawaii corporation ("COMPANY"), and Gerald W. LaFleur ("CONSULTANT"). RECITALS A. COMPANY is desirous of retaining CONSULTANT to perform certain services ("Services") as deemed necessary or desirable by David H. Murdock, Chairman of the Board and Chief Executive Officer of COMPANY. B. CONSULTANT has the skills, training and expertise necessary to perform the Services required by COMPANY. C. COMPANY's needs for the Services are uncertain and subject to substantial change at any time, and from time to time. D. COMPANY requires the utmost flexibility in contracting for and scheduling performance of the Services. E. CONSULTANT acknowledges that the contractual relationship created by this Agreement is inherently insecure in terms of the likelihood of the continuation of the relationship for any length of time. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, and other good and valuable consideration, receipt of which is hereby acknowledged, the parties agree as follows. AGREEMENT 1. SERVICES A. CONSULTANT shall commence providing the Services on July 1, 1996 and shall continue to do so to and including December 31, 1996 (the "Term"), unless sooner terminated as provided herein. B. CONSULTANT will render the Services to COMPANY, and COMPANY will pay CONSULTANT for the Services, the sum of $10,416.67 per calendar month, regardless of the time during a calendar month devoted by CONSULTANT to the performance of Services. Amounts due to CONSULTANT hereunder shall be payable on the ___ business day of each calendar month during the Term hereof. C. COMPANY shall reimburse CONSULTANT for reasonable business expenditures made and substantiated in accordance with the policies and procedures established from time to time by COMPANY. D. During the Term (as hereinafter defined), CONSULTANT agrees to use his best efforts in rendering Services to COMPANY. CONSULTANT shall perform his duties as requested by COMPANY in a professional manner and in a manner which shall be in the best interest of COMPANY. CONSULTANT shall exercise such care as an ordinary prudent person in a like position would exercise under similar circumstances. CONSULTANT may work for others concurrently so long as there is no impairment of the performance of the Services. 2. STATUS OF PARTIES It is understood and agreed by the parties that no joint venture, partnership, employment, agency or other relationship between COMPANY and CONSULTANT, or CONSULTANT's employees or agents, is created by this Agreement. No agent, employee, or servant of CONSULTANT shall be deemed to be the employee, agent or servant of COMPANY. The parties agree that CONSULTANT cannot contract on behalf of COMPANY. CONSULTANT shall perform Services as an independent contractor, and not as an agent or employee of COMPANY, and nothing enumerated herein shall be construed to be inconsistent with this statement. CONSULTANT shall not be compensated through COMPANY's payroll system. Neither CONSULTANT nor CONSULTANT's dependents, family members, heirs, successors and assigns will be entitled to any benefits that COMPANY provides to employees, including but not limited to medical and dental plans, life insurance, vacation pay, pension or profit sharing plans, bonuses or other forms of deferred compensation as a result of this Agreement. CONSULTANT shall be solely responsible, as an independent contractor, for the payment of all CONSULTANT's employment, payroll and other taxes. 3. WARRANTIES AND INDEMNIFICATIONS A. CONSULTANT agrees to indemnify COMPANY from and against any loss, claims, cost or expense, including reasonable attorneys' fees, incurred by COMPANY arising out of or in connection with any breach of CONSULTANT's representations, warranties, covenants or agreements hereunder, including but not limited to taxes, penalties and interest, assessed against COMPANY as a result of a determination by any government agency that CONSULTANT's relationship with COMPANY was other than that of an independent contractor. B. CONSULTANT warrants that he has the authority to enter into this Agreement and that neither this Agreement nor CONSULTANT'S performance hereunder breaches any other contracts, commitments, agreements, or understandings into which CONSULTANT has entered. 2 4. CONFIDENTIAL INFORMATION All information of or concerning COMPANY in any form which is or was previously made available to CONSULTANT, whether as a result of prior employment with COMPANY or in connection with the performance of Services hereunder, shall be treated as confidential information ("Confidential Information"). Confidential Information includes, but is not limited to, formulae, specifications, ideas, inventions, personnel/financial/technical/marketing data, forecasts procedures, "know-how", customer lists or similar information . CONSULTANT agrees that all Confidential Information related in any way to COMPANY's products, business or the Services performed for COMPANY by CONSULTANT belongs solely to COMPANY and shall not be used by CONSULTANT for any purpose other than to perform the Services hereunder. CONSULTANT shall not disclose any Confidential Information to others, except to his employees and related third parties whose duties so require. CONSULTANT shall be responsible for any unauthorized use or disclosure of any Confidential Information by CONSULTANT or by any of his employees or related third parties and for any loss, including reasonable attorney's fees, suffered by COMPANY proximately caused thereby. CONSULTANT's obligations of confidentiality and nondisclosure shall not apply to any portion of the Confidential Information which: (i) is or shall have become public knowledge, by publication or otherwise, through no fault of CONSULTANT; or (ii) subject to Section 6 hereof, is required to be disclosed by law. 5. OWNERSHIP AND USE OF CONSULTANTS' WORK FOR COMPANY CONSULTANT acknowledges that all work papers, documentation and other material delivered to COMPANY pursuant to this Agreement will belong solely to COMPANY and may not be used by CONSULTANT for any other purpose whatsoever; provided that COMPANY will not use CONSULTANT'S name or attribute any statement, analysis or information to CONSULTANT without CONSULTANT'S prior approval, which approval shall not be unreasonably withheld; and provided further, that CONSULTANT may use such materials to perform Services hereunder, to monitor or evaluate such Services or to develop internally CONSULTANT'S professional capability. Upon completion of the Services, or termination pursuant to Section 7 hereof, CONSULTANT shall, in accordance with his usual practice, destroy all materials furnished by COMPANY, all of CONSULTANT'S workpapers, analyses, drafts and other materials prepared in connection with the Services or produced for COMPANY by CONSULTANT, unless COMPANY has requested that CONSULTANT deliver specific materials to COMPANY or to retain them for possible future reference. Notwithstanding any other provision of this Agreement, CONSULTANT will be entitled to retain for his internal purposes one copy of each written report furnished to COMPANY by CONSULTANT; provided that the obligations of CONSULTANT pursuant to Section 4 hereof shall survive with respect to each such copy maintained by CONSULTANT for as long as CONSULTANT 3 maintains such copy. Should CONSULTANT no longer desire to maintain such copy, CONSULTANT shall return each such copy to COMPANY. 6. NOTIFICATION TO COMPANY OF MANDATORY DISCLOSURE If CONSULTANT or any of his representatives are requested or required by oral questions (that a court orders to be answered), interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process, to disclose any part of the Confidential Information, CONSULTANT will (i) promptly notify COMPANY of each such request or requirement and the documents requested thereby, so that COMPANY may seek an appropriate protective order or other remedy and/or waive compliance by CONSULTANT with the provisions of this Agreement, and (ii) consult with COMPANY on the advisability of taking legally available steps to resist or narrow such request or requirement. If in the absence of such a protective order or receipt of such a waiver, CONSULTANT is nonetheless in the written opinion of his outside counsel (a copy of which shall be furnished in advance to COMPANY) compelled to disclose, by mandatorily applicable law, any part of the Confidential Information, CONSULTANT may disclose such Confidential Information without liability under this Agreement, except that in that event, if the circumstances so permit, CONSULTANT shall give COMPANY written notice of the Confidential Information to be so disclosed as far in advance of its disclosure as is lawful and practicable, and CONSULTANT shall use his best efforts to obtain an order or other reliable assurances that confidential treatment will be accorded to the portion of the Confidential Information so required to be disclosed. COMPANY shall reimburse CONSULTANT for reasonable legal and other expenses reasonably incurred by CONSULTANT in complying with the provisions of this Section 6. 7. TERMINATION Either party may terminate the relationship created by this Agreement at any time, with or without cause, by delivery of written notice to the other. In the event of the termination of this Agreement prior to the completion of the Term, CONSULTANT shall be entitled to the compensation earned by him prior to the date of termination pro rata up to and including that date. On termination in accordance with the provisions of Paragraph 1.C. hereof, COMPANY shall also pay CONSULTANT an amount equal to the expenses incurred by him though the date of termination CONSULTANT shall be entitled to no further compensation hereunder as of the date of termination. 8. NOTICE Whenever Notice is required to be given pursuant to this Agreement, it shall be delivered by personal or commercial express delivery service sent by first class mail, postage prepaid and shall be deemed to be given when personally received by CONSULTANT at such address about which one party shall notify the other party. 4 9. ENTIRE AGREEMENT This Agreement represents the entire agreement between the parties and supersedes all prior and concurrent proposals, understandings, communications and agreements between the parties relating to the subject matter of this Agreement. Any modifications or changes will not be effective unless in writing and signed by both parties. CONSULTANT and COMPANY agree that the provisions of this Agreement are severable and that the invalidity of any portion of this Agreement shall not affect the validity of the remainder of the Agreement. 10. GOVERNING LAW This Agreement shall be construed pursuant to the laws of the State of California. 11. SURVIVAL OF TERMS The provisions of Section 3 (Warranties and Indemnifications), Section 4 (Confidential Information), and Section 5 (Ownership and Use of CONSULTANT's Work for COMPANY) shall survive the termination of this Agreement. IT WITNESS WHEREOF, the parties hereto have set their hands and seals as of the day and year first written above. DOLE FOOD COMPANY, INC. ____________________________ By:_____________________ GERALD W. LAFLEUR 5 EX-10.10 4 NON-EMPLOYEE STOCK PLAN DOLE FOOD COMPANY, INC. NON-EMPLOYEE DIRECTORS DEFERRRED STOCK AND CASH COMPENSATION PLAN (AS AMENDED MARCH 20, 1997) NON-EMPLOYEE DIRECTORS DEFERRED STOCK AND CASH COMPENSATION PLAN (AS AMENDED MARCH 20, 1997) TABLE OF CONTENTS Page ARTICLE I TITLE, PURPOSE AND AUTHORIZED SHARES......................... 1 ARTICLE II DEFINITIONS.................................................. 1 ARTICLE III PARTICIPATION................................................ 3 ARTICLE IV DEFERRAL MANDATES AND ELECTIONS.............................. 4 4.1. Mandatory Deferral..................................... 4 4.2. Elections.............................................. 4 ARTICLE V DEFERRAL ACCOUNTS............................................ 5 5.1. Cash Account........................................... 5 5.2. Stock Unit Account..................................... 5 5.3. Dividend Equivalent Credits to Stock Unit Account...... 6 5.4. Immediate Vesting and Accelerated Crediting............ 6 5.5. Distribution of Benefits............................... 6 5.6. Adjustments in Case of Changes in Common Stock......... 7 5.7. Company's Right to Withhold............................ 7 5.8. Stockholder Approval................................... 7 ARTICLE VI ADMINISTRATION............................................... 8 6.1. The Administrator...................................... 8 6.2. Committee Action....................................... 8 6.3. Rights and Duties...................................... 8 6.4. Indemnity and Liability................................ 9 ARTICLE VII PLAN CHANGES AND TERMINATION................................. 9 7.1. Amendments............................................. 9 7.2. Term................................................... 9 i ARTICLE VIII MISCELLANEOUS................................................ 10 8.1. Limitation on Eligible Directors' Rights............... 10 8.2. Beneficiaries.......................................... 10 8.3. Benefits Not Assignable; Obligations Binding Upon Successors............................................. 10 8.4. Governing Law; Severability............................ 11 8.5. Compliance With Laws................................... 11 8.6. Plan Construction...................................... 11 8.7. Headings Not Part of Plan.............................. 11 8.8. Relationship to the 1993 Deferred Compensation Plan.... 11 8.9. Irrevocability of Payout Elections..................... 12 ii NON-EMPLOYEE DIRECTORS DEFERRED STOCK AND CASH COMPENSATION PLAN (AS AMENDED MARCH 20, 1997) ARTICLE I TITLE, PURPOSE AND AUTHORIZED SHARES This Plan shall be known as "Dole Food Company, Inc. Non-Employee Directors Deferred Stock and Cash Compensation Plan". The purpose of this Plan is to attract, motivate and retain experienced and knowledgeable directors of the Company by permitting them to defer compensation and affording them the opportunity to link that compensation to an equity interest in the Company. The total number of shares of Common Stock that may be delivered pursuant to awards under this Plan is 100,000, subject to adjustments contemplated by Section 5.6. ARTICLE II DEFINITIONS Whenever the following terms are used in this Plan they shall have the meaning specified below unless the context clearly indicates to the contrary: ACCOUNT or ACCOUNTS shall mean one or more of the Eligible Director's Cash Account and Stock Unit Account or Accounts, as the context requires. AVERAGE FAIR MARKET VALUE shall mean the average of the Fair Market Values of a share of Common Stock during the last 10 trading days preceding the applicable Award Date. AWARD DATE shall mean (a) with reference to accruals under Section 4.1, June 30 of the applicable Year, and (b) with reference to elections under Section 4.2, (1) in the case of cash deferrals for Meeting and Other Fees, the date of the meeting or other event for which the Compensation is payable, (2) in the case of cash deferrals for the Retainer, the last day of the applicable quarter, and (3) in the case of Stock Unit credits, the June 30 or December 31 on which (or next following the date on which) cash would otherwise have been paid; except as provided in Section 5.4. BOARD shall mean the Board of Directors of the Company. 1 CASH ACCOUNT shall mean the bookkeeping account maintained by the Company on behalf of a Participant who elects to defer his or her Compensation in cash pursuant to Section 4.2 and unless the context otherwise requires shall include any Rollover Account. CHANGE IN CONTROL EVENT shall have the meaning specified for such term under the 1995 Non-Employee Director Stock Option Plan. CODE shall mean the Internal Revenue Code of 1986, as amended. COMMON STOCK shall mean the Common Stock of the Company, subject to adjustment pursuant to Section 5.6. COMMITTEE shall mean the Board or a Committee of the Board acting in accordance with Article VI. COMPANY shall mean Dole Food Company, Inc., a Hawaii corporation, and its successors and assigns. COMPENSATION shall mean the Retainer and Meeting and Other Fees. DIVIDEND EQUIVALENT shall mean the amount of cash dividends or other cash distributions paid by the Company on that number of shares of Common Stock equivalent to the number of Stock Units then credited to a Participant's Stock Unit Account, which amount shall be allocated as additional Stock Units to the Participant's Stock Unit Account, as provided in Section 5.3. EFFECTIVE DATE shall mean April 1, 1996. ELIGIBLE DIRECTOR shall mean a member of the Board who is not an officer or employee of the Company and who is compensated in the capacity as a director and (with reference to any outstanding Account balance under this Plan) any person who has an Account balance under this Plan by reason of his or her prior status as an Eligible Director. EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as amended from time to time. FAIR MARKET VALUE shall mean on any date the closing price of the Common Stock on the Composite Tape, as published in the Western Edition of The Wall Street Journal, of the principal securities exchange or market on which the Common Stock is so listed, admitted to trade, or quoted on such date, or, if there is no trading of the Common Stock on such date, then the closing price of the Common Stock as quoted on such Composite Tape on the next preceding date on which there was trading in such shares. If the Common Stock is not so listed, admitted or quoted, the Committee may designate such other exchange, market or source of data as it deems appropriate for determining such value for purposes of this Plan. 2 INTEREST RATE shall mean the rate that is 120% of the federal long-term rate for compounding on a quarterly basis, determined and published by the Secretary of the United States Department of Treasury under Section 1274(d) of the Code, for the month in which interest is credited. MEETING AND OTHER FEES shall mean all meeting fees (including committee meeting fees) and other fees except for the Retainer that are payable by the Company to an Eligible Director for services as a director of the Company. PARTICIPANT shall mean any person who has an Account balance under this Plan. PLAN shall mean the Dole Food Company, Inc. Non-Employee Directors Deferred Stock and Cash Compensation Plan, as amended. RETAINER shall mean the annual retainer payable by the Company to an Eligible Director. ROLLOVER ACCOUNT shall mean the bookkeeping account maintained by the Company on behalf of an Eligible Director with respect to his or her prior account balance under the Company's 1993 Board of Directors Deferred Compensation Plan that has been transferred to this Plan pursuant to Section 8.8. STOCK UNIT OR UNIT shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of Common Stock of the Company solely for purposes of this Plan. STOCK UNIT ACCOUNT shall mean the bookkeeping account maintained by the Company on behalf of each Eligible Director which is credited with Stock Units in accordance with Section 5.2. YEAR shall mean the calendar year. ARTICLE III PARTICIPATION Each Eligible Director shall participate under Section 4.1 of this Plan with respect to the entire amount of Retainer that would otherwise be payable to the director from January 1 through June 30 of each Year (or, for 1996, from April 1 through September 30). Each Eligible Director may elect to defer under and subject to Section 4.2 of this Plan his or her remaining Compensation for the applicable Year. 3 ARTICLE IV DEFERRAL MANDATES AND ELECTIONS 4.1. MANDATORY DEFERRAL. The Stock Unit Account of each Eligible Director shall be credited on each June 30 with a number of Units determined by dividing the amount of the Retainer otherwise payable to the Eligible Director from January 1 (or the date service commences) through June 30 of the applicable Year by the Average Fair Market Value of the Common Stock on the Award Date (1). 4.2. ELECTIONS. (a) TIME AND TYPES OF ELECTIONS. On or before December 31 of each Year (or, in the case of a person who first becomes an Eligible Director during the Year, within 30 days after election to office), each Eligible Director may make an irrevocable election to defer: (1) IN CASH all or part of the remaining Compensation not otherwise deferred pursuant to Section 4.1 or 4.2(a)(2) (subject to section 4.2(b) hereof) payable for services to be rendered by the Eligible Director during the next Year (or remainder of the Year, as the case may be); (2) IN STOCK UNITS all or part of the remaining Compensation not otherwise deferred pursuant to Section 4.1 or 4.2(a)(1) (subject to Section 4.2(b) hereof) payable to the Eligible Director for services to be rendered during the next Year (or remainder of the Year, as the case may be). (b) PERMITTED AMOUNTS; ELECTIONS. The portions of the remaining Retainer and Meeting and Other Fees subject to deferral shall be limited to increments of 25%, 50%, 75% or 100%. All elections shall be in writing on forms provided by the Company. If an election is made under this Section 4.2 and is not revoked or changed by the end of the applicable deferral period with respect to the next applicable period, the election will be deemed a continuing one. - ---------------------- (1)For 1996, the applicable period under Section 4.1 was April 1 through September 30, and the elective deferral period under Section 4.2 was October 1 through December 31. 4 ARTICLE V DEFERRAL ACCOUNTS 5.1. CASH ACCOUNT. If an Eligible Director has made a cash election under Section 4.2, the Company shall establish and maintain a Cash Account for the Eligible Director under this Plan, which Account shall be a memorandum account on the books of the Company. An Eligible Director's Cash Account shall be credited as follows: (a) As of the date the Compensation would have been otherwise payable, the Company shall credit the Eligible Director's Cash Account with an amount equal to the portion of the Retainer (in the third and fourth quarters only) and Meeting and Other Fees so deferred by the Eligible Director; and (b) As of the last day of each calendar quarter, the Eligible Director's Cash Account shall be credited with earnings in an amount equal to the product of the balance credited to such account as of the last day of the preceding quarter by an amount equal to one-fourth of the Interest Rate. 5.2. STOCK UNIT ACCOUNT. (a) MANDATORY DEFERRALS. Deferrals pursuant to Section 4.1 shall be credited on the applicable Award Date to the Stock Unit Account of the Eligible Director. The number of Units credited shall be determined by dividing the dollar amount of the Retainer so deferred and payable to the Eligible Director by the Average Fair Market Value of a share of Common Stock as of June 30 of the applicable year. (b) ELECTIVE DEFERRALS. If an Eligible Director has made a Stock Unit election under Section 4.2, the Committee shall, as of the end of the semi-annual period in which such Compensation was earned and would otherwise be paid, credit the Eligible Director's Stock Unit Account with an amount of Units determined by dividing the applicable portion of the Eligible Director's Retainer and Meeting and Other Fees (after crediting any interest that would have been credited as of such date if such amounts had been deferred into a Cash Account) by the Fair Market Value of a share of Common Stock as of the applicable June 30 or December 31. (c) LIMITATIONS ON RIGHTS ASSOCIATED WITH UNITS. An Eligible Director's Stock Unit Account shall be a memorandum account on the books of the Company. The Units credited to an Eligible Director's Stock Unit Account shall be used solely as a device for the determination of the number of shares of Common Stock to be eventually distributed to such Eligible Director in accordance with this Plan. The Units shall not be treated as property or as a trust fund of any kind. No Eligible Director shall be entitled to any voting or other stockholder rights with respect to Units granted or credited under this Plan. The number of Units credited (and the Common Stock to which the Eligible Director is entitled under this Plan) shall be subject to adjustment in accordance with Section 5.6. 5 5.3. DIVIDEND EQUIVALENT CREDITS TO STOCK UNIT ACCOUNT. As of June 30 or December 31, as the case may be, an Eligible Director's mandatory and any elective Stock Unit Accounts shall be credited with additional Units in an amount equal to the amount of the Dividend Equivalents representing dividends paid during the preceding six months on that number of shares equal to the aggregate Stock Units in the Participant's Stock Unit Account as of the preceding December 31 or June 30, as the case may be, divided by the Fair Market Value of a share of Common Stock as of the applicable June 30 or December 31, as the case may be. 5.4. IMMEDIATE VESTING AND ACCELERATED CREDITING. (a) UNITS AND OTHER AMOUNTS VEST IMMEDIATELY. All Units or other amounts credited to one or more of an Eligible Director's Stock Unit or Cash Accounts (including any Rollover Account) shall be at all times fully vested. (b) ACCELERATION OF CREDITING OF ACCOUNTS. The crediting of the rights of each Eligible Director in respect of Accounts shall be accelerated if an Eligible Director ceases to be a member of the Board. In such case: (1) the amount of cash that would have been credited as the next quarter end shall be prorated based on the number of full weeks of service during the applicable period; and (2) the number of Units that would have been credited to the Eligible Director's Stock Unit Accounts as of the next June 30 or December 31, as the case may be, shall be prorated based on the number of full weeks of service during the applicable period. For these purposes, the Award Date shall be deemed to be the date of termination of service. 5.5. DISTRIBUTION OF BENEFITS. (a) COMMENCEMENT OF BENEFIT DISTRIBUTION. Each Eligible Director shall be entitled to receive a distribution of his or her Accounts upon his or her termination of service on the Board. Notwithstanding the foregoing, the distribution of each Eligible Director's Rollover Account shall be governed by Section 8.8. (b) MANNER OF DISTRIBUTION. The benefits payable under this Plan shall be distributed to the Eligible Director (or, in the event of his or her death, the Eligible Director's Beneficiary) in a lump sum, or, subject to Section 8.9, as permitted by this Section 5.5(b). Each Eligible Director may elect in writing on forms provided by the Company at the time of making his or her deferral election under Article IV or (subject to Sections 8.9) at least 12 months in advance of the date benefits become distributable under Section 5.5(a) to receive a distribution of his or her benefits in up to five annual installments. Such installment payments shall commence as of the date benefits become distributable under Section 5.5(a). Notwithstanding the foregoing, if the balance remaining in an Eligible Director's Cash Account is less than $5,000 or, if the number of Units remaining in the Eligible Director's Stock Unit Accounts is less than 100, then such remaining balances shall be distributed in a lump sum. 6 (c) EFFECT OF CHANGE IN CONTROL EVENT. Notwithstanding Sections 5.5(a) and (b), if a Change in Control Event and a termination of service has occurred or shall occur, the Eligible Director's Accounts (including accelerated benefits under Section 5.4(b)) shall be distributed immediately in a lump sum. (d) FORM OF DISTRIBUTION. Stock Units credited to an Eligible Director's Stock Unit Account shall be distributed in an equivalent whole number of shares of the Company's Common Stock. Fractions shall be disregarded. Amounts credited to an Eligible Director's Cash Account, including any Rollover Account, shall be distributed in cash. 5.6. ADJUSTMENTS IN CASE OF CHANGES IN COMMON STOCK. If any stock dividend, stock split, recapitalization, merger, consolidation, combination or other reorganization, exchange of shares, sale of all or substantially all of the assets of the Company, split-up, split-off, spin-off, extraordinary redemption, liquidation or similar change in capitalization or any distribution to holders of the Company's Common Stock (other than cash dividends and cash distributions) shall occur, proportionate and equitable adjustments consistent with the effect of such event of stockholders generally (but without duplication of benefits if Dividend Equivalents are credited) shall be made in the number and type of shares of Common Stock or other securities, property and/or rights contemplated hereunder and of rights in respect of Units and Accounts credited under this Plan so as to preserve the benefits intended. 5.7. COMPANY'S RIGHT TO WITHHOLD. The Company shall satisfy any state or federal income tax withholding obligation arising upon distribution of an Eligible Director's Accounts by reducing the amount of cash or the number of shares of Common Stock otherwise deliverable to the Eligible Director, as the case may be. The appropriate number of shares required to satisfy such tax withholding obligation in the case of Stock Units will be based on the Fair Market Value of a share of Common Stock on the day prior to the date of distribution. If the Company, for any reason, cannot satisfy the withholding obligation in accordance with the preceding sentence, the Eligible Director shall pay or provide for payment in cash of the amount of any taxes which the Company may be required to withhold with respect to the benefits hereunder. 5.8 STOCKHOLDER APPROVAL. This Plan, and all the elections, actions and accruals with respect to Stock Units and Dividend Equivalents made prior to stockholder approval, were subject to approval of this Plan by the stockholders of the Company, which was obtained on May 9, 1996. 7 ARTICLE VI ADMINISTRATION 6.1. THE ADMINISTRATOR. The Committee hereunder shall consist of the Board or a committee of Directors appointed from time to time by the Board to serve as administrator of this Plan. Any member of the Committee may resign by delivering a written resignation to the Board. Members of the Committee shall not receive any additional compensation for administration of this Plan. 6.2. COMMITTEE ACTION. A member of the Committee shall not vote or act upon any matter which relates solely to himself or herself as a Participant in this Plan. Action of the Committee with respect to the administration of this Plan shall be taken pursuant to a majority vote or by unanimous written consent of its members. 6.3. RIGHTS AND DUTIES. Subject to the limitations of this Plan, the Committee shall be charged with the general administration of this Plan and the responsibility for carrying out its provisions, and shall have powers necessary to accomplish those purposes, including, but not by way of limitation, the following: (a) To construe and interpret this Plan; (b) To resolve any questions concerning the amount of benefits payable to a Participant (except that no member of the Committee shall participate in a decision relating solely to his or her own benefits); (c) To make all other determinations required by this Plan; (d) To maintain all the necessary records for the administration of this Plan; and (e) To make and publish forms, rules and procedures for the administration of this Plan. The determination of the Committee made in good faith as to any disputed question or controversy and the Committee's determination of benefits payable to Eligible Directors shall be conclusive. In performing its duties, the Committee shall be entitled to rely on information, opinions, reports or statements prepared or presented by: (i) officers or employees of the Company whom the Committee believes to be reliable and competent as to such matters; and (ii) counsel (who may be employees of the Company), independent accountants and other persons as to matters which the Committee believes to be within such persons' professional or expert competence. The Committee shall be fully protected with respect to any action taken or omitted by it in good faith pursuant to the advice of such persons. The Committee may delegate 8 ministerial, bookkeeping and other non-discretionary functions to individuals who are officers or employees of the Company. 6.4. INDEMNITY AND LIABILITY. All expenses of the Committee shall be paid by the Company and the Company shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties. No member of the Committee shall be liable for any act or omission of any other member of the Committee nor for any act or omission on his or her own part, excepting only his or her own willful misconduct or gross negligence. To the extent permitted by law, the Company shall indemnify and save harmless each member of the Committee against any and all expenses and liabilities arising out of his or her membership on the Committee, excepting only expenses and liabilities arising out of his or her own willful misconduct or gross negligence, as determined by the Board. ARTICLE VII PLAN CHANGES AND TERMINATION 7.1. AMENDMENTS. The Board shall have the right to amend this Plan in whole or in part from time to time or may at any time suspend or terminate this Plan; PROVIDED, however, that, except as contemplated by Section 5.8, no amendment or termination shall cancel or otherwise adversely affect in any way, without his or her written consent, any Eligible Director's rights with respect to Stock Units and Dividend Equivalents credited to his or her Stock Unit Accounts (assuming solely for such purposes a voluntary termination of services as of the date of such amendment or termination) or to any amounts previously credited (or that in such circumstances would be credited) to his or her Cash Account, including any Rollover Account. Any amendments authorized hereby shall be stated in an instrument in writing, and all Eligible Directors shall be bound thereby upon receipt of notice thereof. 7.2. TERM. It is the current expectation of the Company that this Plan shall be continued for a period of 10 years after the Effective Date, but continuance of this Plan is not assumed as a contractual obligation of the Company. In the event that the Board of Directors decides to discontinue or terminate this Plan, it shall notify the Committee and Participants in this Plan of its action in writing, and this Plan shall be terminated at the time therein set forth. All Participants shall be bound thereby. In such event, the then credited benefits of a Participant (including any accelerated benefits under Section 5.4) shall be distributed at the time(s) and in the manner elected and provided under Section 5.5. 9 ARTICLE VIII MISCELLANEOUS 8.1. LIMITATION ON ELIGIBLE DIRECTORS' RIGHTS. Participation in this Plan shall not give any person the right to continue to serve as a member of the Board or any rights or interests other than as herein provided. No Participant shall have any right to any payment or benefit hereunder except to the extent provided in this Plan. This Plan shall create only a contractual obligation on the part of the Company as to such amounts and shall not be construed as creating a trust. This Plan, in and of itself, has no assets. Participants shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, on their Cash Accounts and rights no greater than the right to receive the Common Stock (or equivalent value) as a general unsecured creditor. 8.2. BENEFICIARIES. (a) BENEFICIARY DESIGNATION. Upon forms provided by and subject to conditions imposed by the Company, each Participant may designate in writing the Beneficiary or Beneficiaries (as defined in Section 8.2(b)) whom such Participant desires to receive any amounts payable under this Plan after his or her death. The Company and the Committee may rely on the Participant's designation of a Beneficiary or Beneficiaries last filed in accordance with the terms of this Plan. (b) DEFINITION OF BENEFICIARY. A Participant's "Beneficiary" or "Beneficiaries" shall be the person, persons, trust or trusts (or similar entity) designated by the Participant or, in the absence of a designation, entitled by will or the laws of descent and distribution to receive the Participant's benefits under this Plan in the event of the Participant's death, and shall mean the Participant's executor or administrator if no other Beneficiary is identified and able to act under the circumstances. 8.3. BENEFITS NOT ASSIGNABLE; OBLIGATIONS BINDING UPON SUCCESSORS. Benefits of a Participant under this Plan shall not be assignable or transferable and any purported transfer, assignment, pledge or other encumbrance or attachment of any payments or benefits under this Plan, or any interest therein, other than by operation of law or pursuant to Section 8.2, shall not be permitted or recognized. Obligations of the Company under this Plan shall be binding upon successors of the Company. 8.4. GOVERNING LAW; SEVERABILITY. The validity of this Plan or any of its provisions shall be construed, administered and governed in all respects under and by the laws of the State of California. If any provisions of 10 this instrument shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective. 8.5. COMPLIANCE WITH LAWS. This Plan and the offer, issuance and delivery of shares of Common Stock and/or the payment of money through the deferral of compensation under this Plan are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities law) and to such approvals by any listing, agency or any regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under this Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. 8.6. PLAN CONSTRUCTION. It is the intent of the Company that transactions pursuant to this Plan satisfy and be interpreted in a manner that satisfies the applicable requirements of Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3") so that mandatory deferrals and, to the extent elections are timely made, elective deferrals will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Exchange Act and will not be subjected to avoidable liability thereunder. Any contrary interpretation shall be avoided. 8.7. HEADINGS NOT PART OF PLAN. Headings and subheadings in this Plan are inserted for reference only and are not to be considered in the construction of the provisions hereof. 8.8. RELATIONSHIP TO THE 1993 DEFERRED COMPENSATION PLAN. Subject to Section 5.8, this Plan supersedes in its entirety the 1993 Board of Directors Deferred Compensation Plan (the "1993 Plan"). As of the date of stockholder approval of this Plan, accrued balances under the 1993 Plan shall be credited to a Cash Account under this Plan and such balances shall thereafter be credited in accordance with the provisions of this Plan. Payout elections under the 1993 Plan shall be conformed to the nearest equivalent under this Plan. 8.9. LIMITED EXCEPTION TO IRREVOCABILITY OF PAYOUT ELECTIONS. A Participant may, subject to the approval of the Committee, prospectively change an election under Section 5.5(b) by a subsequent election that will take effect at least 12 months after the subsequent election is received by the Company if, in the opinion of Counsel to the Company, the subsequent election would not adversely effect the efficacy of deferrals under the Code in respect of other Participants or this Plan. The Committee may, subject to Sections 8.5 11 and 8.6, permit elections that would not qualify for exemption under Section 16(b) of the Exchange Act, so long as the availability of any exemption thereunder for other Directors under this Plan is not compromised. 12 EX-11 5 COMPUTATION OF EARNINGS EXHIBIT 11 DOLE FOOD COMPANY, INC. Computations of Earnings per Common Share (in 000s, except per share amounts)
For the Year Ended ----------------------------------------- December 28, December 30, December 31, 1996 1995 1994 ------------ ----------- ------------ PRIMARY Income from continuing operations applicable to common shares $ 89,031 $ 119,824 $ 58,245 Income (loss) from discontinued operations applicable to common shares - (96,493) 9,638 ----------- ------------ ---------- Net income applicable to common shares $ 89,031 23,331 67,883 ----------- ------------ ---------- Average number of common shares outstanding during the period 60,027 59,651 59,472 Add: Shares issuable upon exercise of stock options at average prices during the period 421 127 208 ----------- ------------ ---------- Total primary shares 60,448 59,778 59,680 ----------- ------------ ---------- Primary earnings (loss) per common share: Continuing operations $ 1.47 $ 2.00 $ .98 Discontinued operations - (1.61) .16 ----------- ------------ ---------- Net income $ 1.47 $ .39 $ 1.14 ----------- ------------ ---------- FULLY DILUTED Income from continuing operations applicable to common shares $ 89,031 $ 119,824 $ 58,245 Income (loss) from discontinued operations applicable to common shares - (96,493) 9,638 ----------- ------------ ---------- Net income applicable to common shares $ 89,031 $ 23,331 $ 67,883 ----------- ------------ ---------- Average number of common shares outstanding during the period 60,027 59,651 59,472 Add: Shares issuable upon exercise of stock options at higher of average prices or end of period prices 421 335 208 ----------- ------------ ---------- Total fully diluted shares 60,448 59,986 59,680 ----------- ------------ ---------- Fully diluted earnings (loss) per common share Continuing operations $ 1.47 $ 2.00 $ .98 Discontinued operations - (1.61) .16 ----------- ------------ ---------- Net income $ 1.47 $ .39 $ 1.14 ----------- ------------ ----------
EX-13 6 A/R TEXT CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------ Revenue $3,840,303 $3,803,846 $3,498,553 Cost of products sold 3,256,345 3,217,869 2,965,675 - ------------------------------------------------------------------------------------------------------------------------ Gross margin 583,958 585,977 532,878 Selling, marketing and administrative expenses 369,675 392,694 394,763 Restructuring charge 50,000 - - - ------------------------------------------------------------------------------------------------------------------------ Operating income 164,283 193,283 138,115 Interest expense (68,699) (81,186) (76,911) Interest income 8,412 7,501 9,884 Net gain on assets sold or held for disposal - 61,655 - Other income (expense) - net 4,535 (5,429) (2,943) - ------------------------------------------------------------------------------------------------------------------------ Income from continuing operations before income taxes 108,531 175,824 68,145 Income taxes (19,500) (56,000) (9,900) - ------------------------------------------------------------------------------------------------------------------------ Income from continuing operations 89,031 119,824 58,245 Income (loss) from discontinued operations, net of income taxes - (96,493) 9,638 - ------------------------------------------------------------------------------------------------------------------------ Net income $ 89,031 $ 23,331 $ 67,883 - ------------------------------------------------------------------------------------------------------------------------ Earnings (loss) per common share, primary and fully diluted Continuing operations $ 1.47 $ 2.00 $ .98 Discontinued operations - (1.61) .16 - ------------------------------------------------------------------------------------------------------------------------ Net income $ 1.47 $ .39 $ 1.14 - ------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. CONSOLIDATED BALANCE SHEETS
(in thousands) 1996 1995 - ------------------------------------------------------------------------------------------ Current assets Cash and short-term investments $ 34,342 $ 72,151 Receivables - net 518,266 462,303 Inventories 526,052 559,660 Prepaid expenses 47,164 43,087 - ------------------------------------------------------------------------------------------ Total current assets 1,125,824 1,137,201 Investments 72,930 63,319 Property, plant and equipment - net 1,024,135 1,016,991 Long-term receivables - net 69,861 28,409 Other assets 194,057 196,272 - ------------------------------------------------------------------------------------------ $2,486,807 $2,442,192 - ------------------------------------------------------------------------------------------ Current liabilities Notes payable $ 20,478 $ 21,778 Current portion of long-term debt 1,497 1,779 Accounts payable 185,747 182,152 Accrued liabilities 454,208 451,181 - ------------------------------------------------------------------------------------------ Total current liabilities 661,930 656,890 Long-term debt 903,807 895,998 Deferred income taxes and other long-term liabilities 341,798 354,545 Minority interests 29,712 26,324 Commitments and contingencies Common shareholders' equity 549,560 508,435 - ------------------------------------------------------------------------------------------ $2,486,807 $2,442,192 - ------------------------------------------------------------------------------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands) 1996 1995 1994 - ----------------------------------------------------------------------------------------------------------------------------- Operating activities Income from continuing operations $ 89,031 $ 119,824 $ 58,245 Adjustments to continuing operations Depreciation and amortization 111,073 113,325 119,847 Equity earnings net of distributions (2,875) (6,533) (2,539) Net gain on assets sold or held for disposal - (61,655) - Provision for deferred income taxes (1,741) 30,429 14,073 Restructuring charge 50,000 - - Other (8,203) 41 1,191 Change in operating assets and liabilities, net of effects from acquisitions Receivables - net (89,176) 53,142 (103,628) Inventories 27,222 (57,588) 1,376 Prepaid expenses (3,823) 445 (9,383) Other assets (5,023) (19,245) (29,086) Accounts payable and accrued liabilities (54,311) 57,995 35,252 Income taxes payable 20,041 (27,153) 8,558 Other (37,262) 31,592 20,573 - ----------------------------------------------------------------------------------------------------------------------------- Cash flow provided by operating activities of continuing operations 94,953 234,619 114,479 Cash flow (used in) operating activities of discontinued operations - (11,467) (44,906) - ----------------------------------------------------------------------------------------------------------------------------- Cash flow provided by operating activities 94,953 223,152 69,573 Investing activities Proceeds from sales of businesses and assets 58,417 432,746 17,223 Capital additions (109,686) (90,276) (211,882) Purchases of investments and acquisitions, net of cash acquired (58,775) (35,251) (66,660) Other 438 998 879 - ----------------------------------------------------------------------------------------------------------------------------- Cash flow provided by (used in) investing activities of continuing operations (109,606) 308,217 (260,440) Cash flow used in investing activities of discontinued operations - (15,144) (143,635) - ------------------------------------------------------------------------------------------------------------------------------ Cash flow provided by (used in) investing activities (109,606) 293,073 (404,075) Financing activities Short-term borrowings 19,694 29,348 54,213 Repayments of short-term debt (20,449) (62,944) (69,202) Long-term borrowings 168,060 12,384 462,885 Repayments of long-term debt (163,799) (675,098) (33,952) Proceeds from distribution of real estate and resorts business - 235,186 - Cash dividends paid (24,020) (23,861) (23,791) Other (2,642) 5,101 1,170 - ----------------------------------------------------------------------------------------------------------------------------- Cash flow provided by (used in) financing activities of continuing operations (23,156) (479,884) 391,323 Cash flow (used in) financing activities of discontinued operations - (9,352) (45,712) - ----------------------------------------------------------------------------------------------------------------------------- Cash flow provided by (used in) financing activities (23,156) (489,236) 345,611 Increase (decrease) in cash and short-term investments (37,809) 26,989 11,109 Cash and short-term investments at beginning of year 72,151 45,162 34,053 - ----------------------------------------------------------------------------------------------------------------------------- Cash and short-term investments at end of year $ 34,342 $ 72,151 $ 45,162 - -----------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - NATURE OF OPERATIONS Dole Food Company, Inc. and its consolidated subsidiaries ("the Company") is engaged in the worldwide sourcing, processing, distributing and marketing of high quality, branded fresh produce food products including fruits and vegetables. Operations are conducted throughout North America, Latin America, Europe, including eastern European countries, and Asia, primarily in Japan and the Philippines. The Company is also engaged in beverage operations in Honduras. The Company's principal products are produced on both Company-owned or leased land and acquired through associated producer and independent grower arrangements. The Company's products are primarily packed and processed by the Company and sold to retail and institutional customers and other food product companies. NOTE 2 - SUMMARY OF ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of all significant majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. ANNUAL CLOSING DATE - The Company's fiscal year ends on the Saturday closest to December 31. INVENTORIES - Inventories are valued at the lower of cost or market. Cost is determined principally on a first-in, first-out basis. Specific identification and average cost methods are also used for packing materials and operating supplies. AGRICULTURAL COSTS - The costs of growing bananas and pineapples are charged to operations as incurred. Growing costs related to other crops are recognized when the crops are harvested and sold. INVESTMENTS - Investments in affiliates and joint ventures with ownership of 20% to 50% are generally recorded on the equity method. Other investments are accounted for using the cost method. PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets. FOREIGN EXCHANGE - Net foreign exchange transaction gains or losses for subsidiaries with the United States dollar as their functional currency are included in determining net income and resulted in net losses of $2.1 million, $2.4 million, and $3.5 million for 1996, 1995 and 1994, respectively. Net foreign exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries whose local currency is the functional currency are accumulated as a separate component of common shareholders' equity. INCOME TAXES - Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates to the differences between financial statement carrying amounts and the tax bases of assets and liabilities. The income taxes which would be due upon the distribution of foreign subsidiary earnings have not been provided where the undistributed earnings are considered permanently invested. EARNINGS PER COMMON SHARE - Primary earnings per common share are based on the weighted average number of shares outstanding during the period after consideration of the dilutive effect of stock options. The primary weighted average number of common shares outstanding was 60.4 million, 59.8 million and 59.7 million for 1996, 1995 and 1994, respectively. CASH AND SHORT-TERM INVESTMENTS - Cash and short-term investments include cash on hand and time deposits. Such short-term investments generally have original maturities of three months or less. FAIR VALUE OF FINANCIAL INSTRUMENTS - The historical carrying amount is a reasonable estimate of fair value for short-term financial instruments. Fair values for long-term financial instruments not readily marketable were estimated based upon discounted future cash flows at prevailing market interest rates. Based on these assumptions, management believes the fair market values of the Company's financial instruments are not materially different from their recorded amounts as of December 28, 1996. STOCK BASED COMPENSATION - Statement of Financial Accounting Standards No. 123 ("SFAS 123") defines a fair value based method of accounting for employee stock compensation plans but allows for the continuation of the intrinsic value based method of accounting to measure compensation cost prescribed by Accounting Principles Board Opinion No. 25 ("APB 25"). In accordance with SFAS 123, the Company has elected to continue to utilize the accounting method prescribed by APB 25 and adopt the disclosure requirements of SFAS 123. USE OF ESTIMATES - The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. RECLASSIFICATIONS - Certain prior year amounts have been reclassified to conform to the 1996 presentation. NOTE 3 - ACQUISITIONS AND DISPOSITIONS During 1996 and 1995, the Company acquired production and distribution operations in Europe and Latin America. Each of the acquisitions was accounted for as a purchase and accordingly, the purchase price was allocated to the net assets acquired based upon their estimated fair values as of the date of acquisition. The fair values of assets acquired and liabilities assumed were $106 million and $48 million in 1996 and $70 million and $35 million in 1995. In 1996, the Company implemented a formal plan to close its dried fruit facility located in Fresno, California which has suffered continued losses. During the fourth quarter of 1996, a restructuring charge of $50 million was recorded related to the closure of this facility. The principal component of the charge was a provision for asset write-downs of $38.5 million. Management anticipates the closure of this facility to be completed in the second quarter of 1997. During 1995, the Company completed the sale of its juice business, resulting in net proceeds of approximately $270 million and a pretax gain of approximately $145 million. In addition, during 1995 the Company began to implement its plan to sell certain of its agricultural properties and other assets which have generated low returns. The book value of the assets to be sold exceeded the estimated fair value less costs to sell, resulting in an adjustment of $83.3 million. The above dispositions resulted in a net pretax gain of $61.7 million. NOTE 4 - DISCONTINUED OPERATIONS On December 28, 1995, the Company completed the separation of its real estate and resorts business [Castle & Cooke, Inc. ("Castle")] from its food business in a nontaxable distribution to its shareholders. Under the plan of distribution, each Company shareholder of record on December 20, 1995 received a dividend of one share of Castle common stock for every three shares of the Company's common stock. Approximately $1.0 billion of net assets were transferred to Castle, and in partial consideration thereof the Company received cash proceeds of approximately $235 million and a $10 million note receivable from Castle which bears interest at the rate of 7% per annum and is due December 8, 2000. As a result, the Company's common shareholders' equity was reduced by approximately $582 million. (See Note 10.) In connection with the distribution, the operating results of the real estate and resorts business have been accounted for as discontinued operations. Revenues from discontinued operations for 1995 and 1994 were $349 million and $343 million, respectively. Income (loss) from discontinued operations reflects an allocation of the Company's overall interest costs, based on the cash proceeds and the interest bearing note received by the Company at distribution, of $7.3 million and $6.8 million after tax for 1995 and 1994, respectively. During the third quarter of 1995, the Company reviewed certain of its real estate and resort properties to determine whether expected future cash flows (undiscounted and without interest charges) from each property would result in the recovery of the carrying amount of such property. Certain adverse developments in 1995 affecting the Lana'i resort and certain other properties caused management to substantially lower its estimates of future cash flow and led to a determination that the properties were impaired in accordance with generally accepted accounting principles and, accordingly, an impairment loss of $103.8 million after tax was recorded as part of discontinued operations in the accompanying 1995 statement of income. NOTE 5 - CURRENT ASSETS AND LIABILITIES Short-term investments of $7.5 million and $16.3 million as of December 28, 1996 and December 30, 1995, respectively, consisted principally of time deposits. Outstanding checks which are funded as presented for payment totaled $48.8 million and $54.8 million as of December 28, 1996 and December 30, 1995, respectively, and were included in accounts payable. Details of certain current assets were as follows: (IN THOUSANDS) 1996 1995 ------------------------------------------------------------- Receivables Trade $428,186 $374,441 Notes and other 138,577 125,534 Affiliated operations 13,257 9,322 ------------------------------------------------------------- 580,020 509,297 Allowance for doubtful accounts (61,754) (46,994) ------------------------------------------------------------- $518,266 $462,303 ------------------------------------------------------------- Inventories Finished products $169,280 $179,390 Raw materials and work in progress 198,306 216,830 Growing crop costs 46,887 51,980 Packing materials 23,213 25,227 Operating supplies and other 88,366 86,233 ------------------------------------------------------------- $526,052 $559,660 ------------------------------------------------------------- Accrued liabilities as of December 28, 1996 and December 30, 1995 included approximately $101 million and $109 million, respectively, of amounts due to growers. NOTE 6 - PROPERTY, PLANT AND EQUIPMENT Major classes of property, plant and equipment were as follows: (IN THOUSANDS) 1996 1995 ------------------------------------------------------------- Land and land improvements $ 391,561 $ 397,015 Buildings and improvements 277,984 259,974 Machinery and equipment 910,785 832,855 Construction in progress 54,728 81,339 ------------------------------------------------------------- 1,635,058 1,571,183 Accumulated depreciation (610,923) (554,192) ------------------------------------------------------------- $1,024,135 $1,016,991 ------------------------------------------------------------- Depreciation expense for 1996, 1995 and 1994 totaled $102.5 million, $106.2 million and $107.3 million, respectively. NOTE 7 - DEBT Notes payable consisted primarily of short-term borrowings required to fund certain foreign operations and totaled $20.5 million with a weighted average interest rate of 15.7% as of December 28, 1996 and $21.8 million with a weighted average interest rate of 12.8% as of December 30, 1995. Long-term debt consisted of: (IN THOUSANDS) 1996 1995 --------------------------------------------------------------- Unsecured debt Notes payable to banks at an average interest rate of 5.9% (6.8% - 1995) $172,300 $169,547 6.75% notes due 2000 225,000 225,000 7% notes due 2003 300,000 300,000 7.875% debentures due 2013 175,000 175,000 Various other notes due 1997- 2006 at an average interest rate of 5.2% (5.4% - 1995) 23,808 17,085 Secured debt Mortgages, contracts and notes due 1998-2012, at an average interest rate of 9.7% (9.0% - 1995) 11,594 13,890 Unamortized debt discount and issue costs (2,398) (2,745) --------------------------------------------------------------- 905,304 897,777 Current maturities (1,497) (1,779) --------------------------------------------------------------- $903,807 $895,998 --------------------------------------------------------------- The estimated fair value of fixed interest rate debt approximated book value at December 28, 1996 and December 30, 1995. Prior to 1996, the Company had a $1 billion, 5-year revolving credit facility. Net borrowings outstanding under this facility were approximately $81 million at December 30, 1995. In July 1996, the Company replaced its existing revolving credit facility with a $600 million, five-year revolving credit facility ("Facility"). At the Company's option, borrowings under the Facility bear interest at a certain percentage over the agent's prime rate or the London Interbank Offered Rate ("LIBOR"). Provisions under the Facility require the Company to comply with certain financial covenants which include a maximum permitted ratio of consolidated debt to net worth and a minimum required fixed charge coverage ratio. At December 28, 1996 net borrowings outstanding under this facility were approximately $90 million. The Company may also borrow under uncommitted lines of credit at rates offered from time to time by various banks that may not be lenders under the Facility. Net borrowings outstanding under the uncommitted lines of credit totaled $82 million and $89 million at December 28, 1996 and December 30, 1995, respectively. Sinking fund requirements and maturities with respect to long-term debt as of December 28, 1996 were as follows (in millions): 1997 - $1.5; 1998 - $7.7; 1999 - $1.8; 2000 - $226.1; 2001 - $173.5; and thereafter $494.7. Interest payments during 1996, 1995 and 1994 totaled $68.4 million, $86.4 million and $67.6 million, respectively. NOTE 8 - EMPLOYEE BENEFIT PLANS The Company has qualified and non-qualified defined benefit pension plans covering certain full-time employees. Benefits under these plans are generally based on each employee's eligible compensation and years of service except for certain hourly plans which are based on negotiated benefits. For U.S. plans, the Company's funding policy is to fund the net periodic pension cost plus a 15-year amortization of the unfunded liability. The plans covering international employees are generally not funded. The status of the defined benefit pension plans was as follows: U.S. PLANS (IN THOUSANDS) 1996 1995 --------------------------------------------------------------------- Actuarial present value of accumulated benefit obligation Vested $ 231,999 $ 227,572 Non-vested 3,480 3,581 --------------------------------------------------------------------- $ 235,479 $ 231,153 --------------------------------------------------------------------- Actuarial present value of projected benefit obligation $ 248,676 $ 239,855 Plan assets at fair value, primarily stocks and bonds 250,154 238,730 --------------------------------------------------------------------- Projected benefit obligation less than (in excess of) plan assets 1,478 (1,125) Unrecognized net transition asset (774) (942) Unrecognized prior service cost 2,078 2,662 Unrecognized net gain (4,969) (83) Additional minimum liability (720) (1,941) ---------------------------------------------------------------------- Accrued pension liability $ (2,907) $ (1,429) ---------------------------------------------------------------------- INTERNATIONAL PLANS (IN THOUSANDS) 1996 1995 ---------------------------------------------------------------------- Actuarial present value of accumulated benefit obligation Vested $ 9,099 $ 9,411 Non-vested 5,036 3,303 ---------------------------------------------------------------------- $ 14,135 $ 12,714 ---------------------------------------------------------------------- Actuarial present value of projected benefit obligation $ 30,776 $ 28,796 Plan assets at fair value, primarily stocks and bonds 2,473 2,176 ---------------------------------------------------------------------- Projected benefit obligation in excess of plan assets (28,303) (26,620) Unrecognized net transition obligation 2,892 3,133 Unrecognized prior service cost 4,619 3,104 Unrecognized net loss 108 1,576 Additional minimum liability (583) (868) ---------------------------------------------------------------------- Accrued pension liability $ (21,267) $ (19,675) ---------------------------------------------------------------------- For U.S. plans, the projected benefit obligation was determined using assumed discount rates of 7.75% in 1996 and 7.5% in 1995 and assumed rates of increase in future compensation levels of 4.5% in 1996 and 1995. The expected long-term rate of return on assets was 9% in 1996 and 1995. For international plans, the projected benefit obligation was determined using assumed discount rates of 7.75% to 20% in 1996 and 7.5% to 20% in 1995 and assumed rates of increase in future compensation levels of 4.5% to 17.5% in 1996 and 1995. The expected long-term rate of return on assets for international plans was 9% to 20% in 1996 and 1995. Pension expense for the U.S. and international plans consisted of the following components: (IN THOUSANDS) 1996 1995 1994 ------------------------------------------------------------------- Service cost - benefits earned during the year $ 9,143 $ 8,114 $ 7,158 Interest cost on projected benefit obligation 21,968 21,270 20,112 Actual (return) loss on plan assets (32,823) (46,944) 4,656 Net amortization and deferral 13,885 28,337 (22,980) ------------------------------------------------------------------- Net Periodic Pension Cost $ 12,173 $ 10,777 $ 8,946 ------------------------------------------------------------------- The Company recognized net curtailment losses of $1.3 million in 1996 for the domestic plans and $3.6 million in 1995 for the international plans. These losses were due to additional benefit payments resulting from reductions in workforce. The Company offers two 401(k) plans generally covering all full-time U.S. employees. Eligible employees may defer a percentage of their annual compensation up to a maximum allowable amount under federal income tax law to supplement their retirement income. These plans provide for Company contributions based on a certain percentage of each participant's contribution. Total Company contributions to these plans in 1996, 1995 and 1994 were $3.8 million, $4.4 million and $4.7 million, respectively. The Company is also a party to various industrywide collective bargaining agreements which provide pension benefits. Total contributions to these plans plus direct payments to pensioners in 1996, 1995 and 1994 were $1.2 million, $0.8 million and $0.9 million, respectively. In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for eligible retired employees. Certain employees may become eligible for such benefits if they fulfill established requirements upon reaching retirement age. The status of the postretirement benefit plans was as follows: (IN THOUSANDS) 1996 1995 -------------------------------------------------------------- Accumulated postretirement benefit obligation ("APBO") Retirees $62,991 $66,757 Fully eligible actives 5,746 6,892 Other actives 4,439 7,669 -------------------------------------------------------------- 73,176 81,318 Unrecognized prior service cost 2,080 1,897 Unrecognized net gain 13,034 4,660 -------------------------------------------------------------- Accrued postretirement benefit liability $88,290 $87,875 -------------------------------------------------------------- Postretirement benefit expense included the following components: (IN THOUSANDS) 1996 1995 1994 ------------------------------------------------------------------- Service cost - benefits earned during the year $ 237 $ 449 $ 578 Interest cost on APBO 5,482 7,258 6,755 Net amortization and deferral (481) (342) 26 Curtailment gain (577) - - ------------------------------------------------------------------- Net periodic postretirement benefit cost $4,661 $7,365 $7,359 ------------------------------------------------------------------- An annual rate of increase in the per capita cost of covered health care benefits of 9.5% in 1997 decreasing to 5.0% in 2006 and thereafter was assumed in determining the APBO for the U.S. and international plans in 1996, and 10.0% in 1996 decreasing to 5.0% in 2006 was assumed in determining the APBO for the U.S. plans in 1995. For the Company's international plan, the assumed health care cost trend rate was 20% in 1995. Increasing the assumed health care cost trend rate by one percentage point in each year would have resulted in an increase in the Company's APBO as of December 28, 1996 of approximately $7.4 million and the aggregate of the service and interest cost components of postretirement benefit expense for 1996 of approximately $0.6 million. The weighted average discount rate used in determining the APBO was 7.75% for the international and U.S. plans in 1996 and 7.5% for the U.S. plans and 20% for the international plan in 1995. The plans are not funded. NOTE 9 - STOCK OPTIONS AND AWARDS Under the 1991 and 1982 Stock Option and Award Plans ("the Option Plans"), the Company can grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards and performance share awards to officers and key employees of the Company. Stock options vest over time or based on stock price appreciation and may be exercised for up to 10 years from the date of grant, as determined by the committee of the Company's Board of Directors administering the Option Plans. No stock appreciation rights, restricted stock awards or performance share awards were outstanding at December 28, 1996. Under the 1995 Non-Employee Directors Stock Option Plan (the "Directors Plan") each active non-employee director will receive a grant of 1,500 non-qualified stock options (the "Options") on February 15th of each year. The Options vest over three years and expire 10 years after the date of the grant or upon early termination as defined by the plan agreement. Changes in outstanding stock options were as follows: WEIGHTED AVERAGE SHARES PRICE -------------------------------------------------------------- Outstanding, January 1, 1994 1,719,782 $29.98 Granted 508,500 29.07 Exercised (12,117) 26.69 Canceled (160,401) 34.39 -------------------------------------------------------------- Outstanding, December 31, 1994 2,055,764 $29.43 Granted 563,000 27.21 Exercised (371,989) 13.73 Canceled (294,513) 31.30 Adjustment for distribution of real estate and resorts business 8,158 -------------------------------------------------------------- Outstanding, December 30, 1995 1,960,420 $29.23 Granted 711,000 38.52 Exercised (373,952) 30.04 Canceled (103,661) 33.39 -------------------------------------------------------------- Outstanding, December 28, 1996 2,193,807 $31.91 -------------------------------------------------------------- Exercisable, December 28, 1996 1,313,468 $29.59 -------------------------------------------------------------- The number and exercise price of all options outstanding were adjusted to reflect the impact of the distribution of the real estate and resorts business in December 1995. (See Note 4.) Of the 2,193,807 options outstanding as of December 28, 1996, 589,464 have exercise prices between $17.50 and $26.61 with a weighted-average exercise price of $25.40 and a weighted-average remaining term of 6 years, 792,523 have exercise prices between $27.07 and $34.31 with a weighted-average exercise price of $30.31 and a weighted-average remaining term of 6 years and 811,820 have exercise prices between $36.52 and $41.75 with a weighted-average exercise price of $38.21 and a weighted-average remaining term of 8 years. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for grants in 1996 and 1995, respectively; dividend yield of 1.0% and 1.5%, expected volatility of 30% for both years, risk-free interest rates of 5.8% and 7.4% and expected lives of 9 years and 7 years. The weighted-average fair value of options granted during 1996 and 1995 was $15.08 and $11.23, respectively. The Company accounts for the Option Plans under APB 25 and, accordingly, no compensation costs have been recognized in the accompanying statement of income for 1996 or 1995. Had compensation costs for the Option Plans been determined under SFAS 123, pro forma net income and earnings per share would have been $86.0 million and $1.42, respectively, for 1996 and $22.2 million and $0.37, respectively, for 1995. Since SFAS 123 was only applied to options granted subsequent to December 31, 1994, the resulting pro forma compensation cost may not be representative of that to be expected in future years. NOTE 10 - SHAREHOLDERS' EQUITY Authorized capital at December 28, 1996 consisted of 80 million shares of no par value common stock and 30 million shares of no par value preferred stock, issuable in series. At December 28, 1996, approximately 5.4 million shares and 53,024 shares of common stock were reserved for issuance under the Option Plans and the Directors Plan, respectively. There was no preferred stock outstanding. The Company's dividend policy is to pay quarterly dividends on common shares at an annual rate of 40 cents per share. During 1996, the Company announced a program to repurchase up to 5% of its outstanding common stock. As of December 28, 1996 the Company had repurchased 395,400 shares at a cost of $13.9 million. Changes in shareholders' equity were as follows:
CUMULATIVE TOTAL ADDITIONAL FOREIGN COMMON COMMON COMMON PAID-IN RETAINED CURRENCY SHAREHOLDERS' SHARES (IN THOUSANDS, EXCEPT SHARE DATA) STOCK CAPITAL EARNINGS ADJUSTMENT EQUITY OUTSTANDING - ---------------------------------------------------------------------------------------------------------------------------------- Balance, January 1, 1994 $320,099 $164,908 $ 596,573 $(29,466) $1,052,114 59,455,918 Net income - - 67,883 - 67,883 - Cash dividends declared ($.50 per share) - - (29,739) - (29,739) - Translation adjustments - - - (10,272) (10,272) - Issuance of common stock 22 633 - - 655 22,190 - ----------------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1994 320,121 165,541 634,717 (39,738) 1,080,641 59,478,108 Net income - - 23,331 - 23,331 - Cash dividends declared ($.30 per share) - - (17,913) - (17,913) - Translation adjustments - - - (859) (859) - Distribution of real estate and resorts business - - (581,866) - (581,866) - Issuance of common stock 376 4,725 - - 5,101 376,631 - ----------------------------------------------------------------------------------------------------------------------------------- Balance, December 30, 1995 320,497 170,266 58,269 (40,597) 508,435 59,854,739 Net income - - 89,031 - 89,031 - Cash dividends declared ($.40 per share) - - (24,020) - (24,020) - Translation adjustments - - - (21,244) (21,244) - Issuance of common stock 374 10,858 - - 11,232 373,952 Repurchase of common stock (395) (13,479) - - (13,874) (395,400) - ----------------------------------------------------------------------------------------------------------------------------------- Balance, December 28, 1996 $320,476 $167,645 $ 123,280 $(61,841) $ 549,560 59,833,291 - -----------------------------------------------------------------------------------------------------------------------------------
NOTE 11 - CONTINGENCIES At December 28, 1996, the Company was guarantor of $73 million of indebtedness of certain key fruit suppliers and other entities integral to the Company's operations. The Company is involved from time to time in various claims and legal actions incident to its operations, both as plaintiff and defendant. In the opinion of management, after consultation with legal counsel, none of such claims is expected to have a material adverse effect on the Company's financial position or results of operations. NOTE 12 - LEASE COMMITMENTS The Company has obligations under non-cancelable operating leases, primarily for ship charters and containers, and certain equipment and office facilities. Lease terms are generally for less than the economic life of the property. Certain agricultural land leases provide for increases in minimum rentals based on production. Total rental expense was $158.7 million, $147.3 million and $117.1 million (net of sublease income of $12.4 million, $9.4 million and $8.7 million) for 1996, 1995 and 1994, respectively. During 1995, the Company entered into an agreement with a syndicate of banks for the sale and leaseback for seven years of certain vessels. This transaction generated net proceeds of approximately $133 million. At December 28, 1996, the Company's aggregate minimum rental commitments, before sublease income, were as follows (in millions): 1997 - $146.0; 1998 - $86.3; 1999 - $79.2; 2000 - $57.1; 2001 - $33.2; and thereafter - $195.9. Total future sublease income is $17.1 million. NOTE 13 - INCOME TAXES Income tax expense (benefit) was as follows: (IN THOUSANDS) 1996 1995 1994 -------------------------------------------------------------------------- Current Federal, state and local $ 1,882 $ 2,292 $(25,594) Foreign 19,359 23,279 21,421 -------------------------------------------------------------------------- 21,241 25,571 (4,173) Deferred Federal, state and local (444) 30,656 8,989 Foreign (1,297) (227) 5,084 -------------------------------------------------------------------------- (1,741) 30,429 14,073 -------------------------------------------------------------------------- $19,500 $56,000 $ 9,900 -------------------------------------------------------------------------- Pretax earnings attributable to foreign operations were $173 million, $181 million and $165 million for 1996, 1995 and 1994, respectively. Undistributed earnings of foreign subsidiaries, which have been or are intended to be permanently invested, aggregated $1.1 billion at December 28, 1996. The Company's reported income tax expense varied from the expense calculated using the U.S. federal statutory tax rate for the following reasons: (IN THOUSANDS) 1996 1995 1994 -------------------------------------------------------------------------- Expense computed at U.S. federal statutory income tax rate $ 37,986 $ 61,538 $ 23,851 Foreign income taxed at different rates (21,656) (16,366) (11,036) Dividends from subsidiaries 618 - 187 State and local income tax, net of federal income tax benefit 1,100 4,293 (584) Other 1,452 6,535 (2,518) -------------------------------------------------------------------------- Reported income tax expense $ 19,500 $ 56,000 $ 9,900 -------------------------------------------------------------------------- -------------------------------------------------------------------------- In 1996, the Company filed for and received a federal income tax refund of $22.9 million related to overpayments made in 1995. Total income tax payments (net of refunds) for 1996, 1995 and 1994 were $(1.6) million, $51.3 million and $4.1 million, respectively. Deferred tax assets (liabilities) were comprised of the following: (IN THOUSANDS) 1996 1995 1994 -------------------------------------------------------------------------- Operating reserves $ 45,246 $ 36,840 $ 2,053 Accelerated depreciation (21,717) (37,868) (35,040) Inventory valuation methods 3,670 3,690 13,086 Effect of differences between book values assigned in prior acquisitions and historical tax values (36,941) (37,927) (61,811) Postretirement benefits 33,946 31,263 32,484 Current year acquisitions (6,560) - - Tax credit carryforward 4,987 39,310 30,509 Net operating loss carryforward 77,685 79,616 10,998 Other, net (12,117) (22,308) (29,642) -------------------------------------------------------------------------- $ 88,199 $ 92,616 $(37,363) --------------------------------------------------------------------------- --------------------------------------------------------------------------- The Company has recorded deferred tax assets of $77.7 million reflecting the benefit of approximately $203 million in federal and state net operating loss carryovers which will, if unused, begin to expire in 2009 (federal) and 2006 (state). The tax credit carryforward amount of $5 million is primarily comprised of alternative minimum tax credits which can be utilized to reduce regular tax liabilities and may be carried forward indefinitely, and general business credits which begin to expire in 2005. Total deferred tax assets and deferred tax liabilities were as follows: (IN THOUSANDS) 1996 1995 1994 ------------------------------------------------------------------------ Deferred tax assets $ 253,831 $ 281,392 $ 182,078 Deferred tax liabilities (165,632) (188,776) (219,441) ------------------------------------------------------------------------ $ 88,199 $ 92,616 $ (37,363) ------------------------------------------------------------------------ The Company remains contingently liable with respect to certain tax credits sold with recourse by Flexi-Van Corporation ("Flexi-Van"), the Company's former transportation equipment leasing business, to a third party in 1981. These credits, which have been contested by the Internal Revenue Service, continue to be litigated by Flexi-Van. Flexi-Van, which separated from the Company in 1987 and was subsequently acquired by David H. Murdock, has indemnified the Company against obligations that might result from the resolution of this matter. NOTE 14 - GEOGRAPHIC AREA SEGMENT INFORMATION The Company's only significant segment of business is food products. Revenue, operating income and identifiable assets pertaining to the geographic areas in which the Company operates are presented below. Product transfers between geographic areas are accounted for based on the estimated fair market value of the products. (IN MILLIONS) 1996 1995 1994 ------------------------------------------------------------------------ Revenue North America $1,843 $1,959 $1,933 Latin America 801 771 677 Asia 974 914 842 Europe 1,040 959 777 Intercompany elimination (818) (799) (730) ------------------------------------------------------------------------ $3,840 $3,804 $3,499 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Operating Income (Loss) North America $ 76 $ 72 $ (8) Latin America 149 138 131 Asia 17 14 16 Europe 0 3 13 Corporate (78) (34) (14) ------------------------------------------------------------------------ $ 164 $ 193 $ 138 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Identifiable Assets North America $ 980 $ 973 $1,065 Latin America 695 698 776 Asia 289 327 332 Europe 446 339 339 Net assets held for distribution - - 1,066 Corporate 77 105 107 ------------------------------------------------------------------------ $2,487 $2,442 $3,685 ------------------------------------------------------------------------ ------------------------------------------------------------------------ NOTES: REVENUE INCLUDES INTER-AREA TRANSFERS FROM LATIN AMERICA TO NORTH AMERICA, ASIA AND EUROPE OF $542 MILLION, $514 MILLION AND $444 MILLION IN 1996, 1995 AND 1994, RESPECTIVELY; FROM ASIA TO NORTH AMERICA AND EUROPE OF $170 MILLION, $184 MILLION AND $190 MILLION IN 1996, 1995 AND 1994, RESPECTIVELY; FROM NORTH AMERICA TO ASIA AND EUROPE OF $78 MILLION, $72 MILLION AND $77 MILLION IN 1996, 1995 AND 1994, RESPECTIVELY; AND FROM EUROPE TO NORTH AMERICA, ASIA AND LATIN AMERICA OF $28 MILLION, $29 MILLION AND $19 MILLION IN 1996, 1995 AND 1994, RESPECTIVELY. CORPORATE OPERATING LOSS FOR 1996 INCLUDES THE RESTRUCTURING CHARGE OF $50 MILLION. NET ASSETS HELD FOR DISTRIBUTION AS OF DECEMBER 31, 1994 ARE RELATED TO THE REAL ESTATE AND RESORTS BUSINESS DISTRIBUTED TO THE COMPANY'S SHAREHOLDERS IN 1995. (SEE NOTE 4.) NOTE 15 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following table presents summarized quarterly results.
FIRST SECOND THIRD FOURTH (IN THOUSANDS, EXCEPT PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER YEAR - ------------------------------------------------------------------------------------------------------------------------------ 1996 Revenue $814,438 $1,041,191 $1,093,586 $891,088 $3,840,303 Gross margin 126,990 179,592 155,961 121,415 583,958 Net income (loss) 30,009 63,580 22,966 (27,524) 89,031 - ------------------------------------------------------------------------------------------------------------------------------ Net income (loss) per common share $ .50 $ 1.05 $ .38 $ (.46) $ 1.47 - ------------------------------------------------------------------------------------------------------------------------------ 1995------------------------------------------------------------------------------------------------------------------------------ Revenue $849,124 $1,068,814 $1,048,594 $837,314 $3,803,846 Gross margin 150,749 183,423 148,756 103,049 585,977 Income from continuing operations 24,411 75,855 14,278 5,280 119,824 Income (loss) from discontinued operations (790) 2,807 (105,054) 6,544 (96,493) - ------------------------------------------------------------------------------------------------------------------------------ Net income (loss) $ 23,621 $ 78,662 $ (90,776) $ 11,824 $ 23,331 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ Earnings (loss) per common share Continuing operations $ .41 $ 1.27 $ .24 $ .09 $ 2.00 Discontinued operations (.01) .05 (1.76) .11 (1.61) - ------------------------------------------------------------------------------------------------------------------------------ Net income (loss) per common share $ .40 $ 1.32 $ (1.52) $ .20 $ .39 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------
THE NET LOSS FOR THE FOURTH QUARTER OF 1996 INCLUDES A CHARGE OF $50 MILLION, BEFORE TAX, RELATED TO THE RESTRUCTURING OF THE COMPANY'S DRIED FRUIT BUSINESS. ALL QUARTERS HAVE TWELVE WEEKS, EXCEPT THE THIRD QUARTERS OF BOTH YEARS WHICH HAVE SIXTEEN WEEKS. NOTE 16 - COMMON STOCK DATA (UNAUDITED) The following table shows the market price range of the Company's common stock for each quarter in 1996 and 1995. High Low ----------------------------------------------------- 1996 First Quarter $42 3/4 $34 1/8 Second Quarter 43 37 1/4 Third Quarter 43 1/2 38 7/8 Fourth Quarter 40 1/4 32 7/8 ----------------------------------------------------- Year $43 1/2 $32 7/8 ----------------------------------------------------- ----------------------------------------------------- 1995 First Quarter $28 3/8 $24 Second Quarter 28 1/4 30 3/4 Third Quarter 35 28 1/2 Fourth Quarter 38 33 1/2 ----------------------------------------------------- Year $38 $24 ----------------------------------------------------- ----------------------------------------------------- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Board of Directors of Dole Food Company, Inc.: We have audited the accompanying consolidated balance sheets of Dole Food Company, Inc. (a Hawaii corporation) and subsidiaries as of December 28, 1996 and December 30, 1995, and the related consolidated statements of income and cash flow for the years ended December 28, 1996, December 30, 1995 and December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Dole Food Company, Inc. and subsidiaries as of December 28, 1996 and December 30, 1995, and the results of its operations and its cash flow for the years ended December 28, 1996, December 30, 1995 and December 31, 1994, in conformity with generally accepted accounting principles. /s/ Arthur Andersen LLP Los Angeles, California February 6, 1997 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION 1996 COMPARED WITH 1995 REVENUE - Revenue increased 4% to $3,840.3 million in 1996 from $3,694.5 million in 1995, excluding revenue from the juice business sold in 1995. The revenue growth resulted from a combination of increased sales volumes and favorable pricing and 1996 business acquisitions and joint ventures. SELLING, MARKETING AND ADMINISTRATIVE EXPENSES - Selling, marketing and administrative expenses decreased 6% to $369.7 million or 9.6% of revenue in 1996 from $392.7 million or 10.3% of revenue in 1995. Of the decrease, $17.1 million resulted from the sale of the juice business in 1995. RESTRUCTURING CHARGE - In 1996, the Company implemented a formal plan to close its dried fruit facility located in Fresno, California which has suffered continued losses. During the fourth quarter of 1996, a restructuring charge of $50.0 million ($41.0 million after tax or $0.68 per share) was recorded related to the closure of this facility. Principal components of the charge are provisions for asset write-downs, contract terminations and severance payments. Management anticipates the closure of this facility to be completed in the second quarter of 1997. OPERATING INCOME - Operating income before the restructuring charge improved 10.9% to $214.3 million in 1996 compared to $193.3 million in 1995. Processed pineapple operations improved in 1996 due to favorable pricing and reduced shipping costs. Fresh pineapple operations benefited from the closure of operations in the Dominican Republic which historically generated negative returns. Partially offsetting the improved results from the pineapple operations was the return to normal pricing levels for the fresh vegetable business which benefited from favorable pricing in 1995 due to flooding. The return to normal pricing levels was somewhat mitigated by increased volumes for the value added, pre-cut salad business. The European Union ("E.U.") banana regulations which impose quotas and tariffs on bananas remained in full effect in 1996, and continue in effect in 1997. Trade negotiations and discussions continue between the E.U., the United States and the individual banana exporting countries. These trade negotiations could lead to further changes in the regulations governing banana exports to the E.U. The net impact of these changing regulations on the Company's future results of operations is not determinable at this time. The Company distributes its products in more than 90 countries throughout the world. Its international sales are usually transacted in U.S. dollars and major European and Asian currencies, while certain costs are incurred in currencies different from those that are received from the sale of the product. Results of operations may be affected by fluctuations of currency exchange rates in both the sourcing and selling locations. INTEREST EXPENSE, NET - Interest expense, net of interest income, decreased to $60.3 million in 1996 from $73.7 million in 1995 as a result of lower average debt levels throughout the year. OTHER INCOME (EXPENSE) - Other income for 1996 increased $10.0 million from 1995 primarily due to the gain on the sale of certain investments and other assets and increased earnings from joint ventures. INCOME TAXES - The Company's effective tax rate decreased to 18% in 1996 as a result of a change in the mix of the Company's foreign and domestic earnings. The 1995 tax rate was significantly impacted by the sale of the juice business. 1995 COMPARED WITH 1994 REVENUE - Revenue increased 9% to $3,803.9 million. Excluding revenue from the juice business which was sold in 1995, revenue increased 14%. The increase in revenue was primarily attributable to growth in existing product lines, increases in worldwide banana revenues and favorable pricing for the fresh vegetable business which resulted from the March 1995 California floods. SELLING, MARKETING AND ADMINISTRATIVE EXPENSES - Selling, marketing and administrative expenses from continuing operations were $392.7 million or 10.3% of revenue in 1995 compared to $394.8 million or 11.3% of revenue in 1994. The decrease was primarily due to the sale of the juice business in the second quarter of 1995 which was partially offset by business expansions and acquisitions. OPERATING INCOME - Operating income reflected significant improvement, increasing 40% to $193.3 million in 1995 from $138.1 million in 1994. Higher earnings in 1995 were primarily related to improvements in the worldwide banana market, particularly in the Pacific Rim and the fresh vegetable business which profited from favorable pricing. The fresh and processed pineapple and the value-added, pre-cut salad businesses also posted improved results in 1995, partially offset by lower results for dried fruit and nut operations. NET GAIN ON ASSETS SOLD OR HELD FOR DISPOSAL - During the second quarter of 1995, the sale of the Company's juice business was completed, resulting in a pretax gain of approximately $145 million. Revenues related to this business totaled approximately $109 million and $300 million in 1995 and 1994, respectively. In addition, during the second quarter of 1995, the Company began to implement its plans to sell certain of its agricultural properties and other assets which generated low returns. The book value of the assets to be sold exceeded their estimated fair value less costs to sell, resulting in an adjustment of $83 million. The gain on the sale of the juice business, net of adjustments related to the planned disposal of assets, resulted in a net pretax gain of $61.7 million and an increase in the Company's estimated 1995 annualized income tax rate from 23% to 32%. INTEREST EXPENSE, NET - Interest expense, net of interest income, increased to $73.7 million in 1995 from $67.0 million in 1994, due to higher interest rates, offset by slightly lower average debt levels. INCOME TAXES - The Company's effective income tax rate increased to 32% in 1995 from 15% in 1994, primarily as a result of a change in the mix of domestic and foreign earnings impacted by the non-recurring gain on the sale of the juice business in the second quarter of 1995. DISCONTINUED OPERATIONS - The Company reported a $96.5 million loss, net of tax, ($1.61 per share) from discontinued operations in 1995. The loss from discontinued operations includes distribution expenses of $3.0 million, net of tax, and a write-down of certain real estate and resort properties of $103.8 million, net of tax. The write-down resulted primarily from certain adverse developments in 1995 affecting the Lana'i resort and certain other properties which caused management to substantially lower its estimate of their future cash flows. LIQUIDITY AND CAPITAL RESOURCES The Company's operational and investing activities in 1996 were financed by funds generated internally and cash on hand at December 30, 1995. Cash and short-term investments were $34.3 million at December 28, 1996 compared to $72.2 million at December 30, 1995. Operating activities generated cash flow of $95.0 million in 1996 compared to $234.6 million in 1995. The decrease was primarily related to higher receivable levels resulting from increased sales and advances to key fruit suppliers combined with a significant reduction in accounts payable and accrued liabilities. Positively impacting cash flow from operations were higher sales which resulted in reduced inventory levels at December 28, 1996 compared to December 30, 1995 and the receipt of a federal income tax refund of $22.9 million. In December 1996, the Company announced its plan to close its Fresno, California dried fruit operations which will relieve future operations of sizable losses and allow for a substantial reduction in working capital requirements associated with this business. This initiative was taken as part of the Company's overall plan to dispose of or liquidate assets which do not meet the Company's minimum return on investment requirements. Capital expenditures for the acquisition and maintenance of productive assets were $109.7 million in 1996 and were funded with cash provided by current year operations and the proceeds from the sale of existing assets and agricultural properties. The Company also acquired a Spanish grower/marketer of citrus and fresh vegetables, a 50% interest in a Guatemalan banana producer and other food related operations in Latin America and Europe for an aggregate cash purchase price of $58.8 million. In July 1996, the Company replaced its existing revolving credit facility with a $600 million, five-year revolving credit facility ("Facility"). Provisions under the Facility require the Company to comply with certain financial covenants which include a maximum permitted ratio of consolidated debt to net worth and a minimum required fixed charge coverage ratio. At December 28, 1996 net borrowings outstanding under this facility were approximately $90 million. The Company may also borrow under uncommitted lines of credit at rates offered from time to time by various banks that may not be lenders under the Facility. Net borrowings outstanding under the uncommitted lines of credit totaled $82 million at December 28, 1996. During 1996, the Company announced a program to repurchase up to 5% of its outstanding common stock. As of December 28, 1996 the Company had repurchased 395,400 shares of its outstanding shares at a cost of $13.9 million. The Company does not expect the stock repurchase program to affect the Company's ability to fund operating requirements, capital expenditures or acquisitions. The Company paid four quarterly dividends of 10 cents per share on its common stock totaling $24.0 million in 1996. The Company believes that cash from operations and its cash position will be sufficient to enable it to meet its capital expenditure, debt maturity, common stock repurchase, dividend payment and other funding requirements. RESULTS OF OPERATIONS AND SELECTED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA) 1996 1995 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------------------------ Revenue $3,840 $3,804 $3,499 $3,108 $3,120 Cost of products sold 3,256 3,218 2,966 2,609 2,633 - ------------------------------------------------------------------------------------------------------------------------------ Gross margin 584 586 533 499 487 Selling, marketing and administrative expenses 370 393 395 333 312 Cost reduction program - - - 43 42 Restructuring charge 50 - - - - - ------------------------------------------------------------------------------------------------------------------------------ Operating income 164 193 138 123 133 Interest expense - net (60) (74) (67) (48) (48) Net gain on assets sold or held for disposal - 62 - - - Other income (expense) - net 5 (5) (3) (9) (12) - ------------------------------------------------------------------------------------------------------------------------------ Income from continuing operations before income taxes and accounting change 109 176 68 66 73 Income taxes (20) (56) (10) (4) (7) - ------------------------------------------------------------------------------------------------------------------------------ Income from continuing operations before accounting change 89 120 58 62 66 Discontinued operations - (97) 10 16 (2) - ------------------------------------------------------------------------------------------------------------------------------ Income before accounting change 89 23 68 78 64 Cumulative effect of accounting change - - - - (48) - ------------------------------------------------------------------------------------------------------------------------------ Net income $ 89 $ 23 $ 68 $ 78 $ 16 - ------------------------------------------------------------------------------------------------------------------------------ - ---------------------------------------------------------------------------------------------------------------------------- Earnings per common share, fully diluted Continuing operations before accounting change $ 1.47 $ 2.00 $ .98 $ 1.04 $ 1.11 Discontinued operations - (1.61) .16 .26 (.04) Cumulative effect of accounting change - - - (.81) - ------------------------------------------------------------------------------------------------------------------------------ Net income $ 1.47 $ .39 $ 1.14 $ 1.30 $ .26 - ------------------------------------------------------------------------------------------------------------------------------ - ---------------------------------------------------------------------------------------------------------------------------- Other statistics Working capital $ 464 $ 480 $ 495 $ 391 $ 398 Total assets 2,487 2,442 3,685 3,159 2,926 Long-term debt 904 896 1,555 1,111 950 Total debt 926 920 1,609 1,190 1,031 Common shareholders' equity 550 508 1,081 1,052 1,001 Annual cash dividends per common share .40 .40 .40 .40 .40 Capital additions for continuing operations 110 90 212 174 164 Depreciation and amortization from continuing operations 111 113 120 106 90 - ------------------------------------------------------------------------------------------------------------------------------ - ----------------------------------------------------------------------------------------------------------------------------
DIRECTORS AND OFFICERS DOLE FOOD COMPANY, INC. DIRECTORS Elaine L. Chao(2) Distinguished Fellow The Heritage Foundation Mike Curb(1),(3) Chairman Curb Records, Inc. Curb Entertainment International Corp. David A. DeLorenzo President and Chief Operating Officer Dole Food Company, Inc. Richard M. Ferry(1),(2) President and Director Korn/Ferry International, Inc. (international executive search firm) James F. Gary(2),(3) Chairman Emeritus Pacific Resources, Inc. (international energy and holding company) Zoltan Merszei(3) Former Chairman and President Dow Chemical Company David H. Murdock(1) Chairman of the Board and Chief Executive Officer Dole Food Company, Inc. DOLE FOOD COMPANY, INC. OFFICERS David H. Murdock Chairman of the Board and Chief Executive Officer David A. DeLorenzo President and Chief Operating Officer Gerald W. LaFleur Executive Vice President David A. Cohen Senior Vice President - Acquisitions and Investments Harvey J. Heimbuch Vice President and Controller George R. Horne Vice President - Human Resources Edward A. Lang, III Vice President and Treasurer Patrick A. Nielson Vice President - International Legal and Regulatory Affairs Thomas J. Pernice Vice President - Public Affairs David W. Perrigo Vice President - Taxes J. Brett Tibbitts Vice President - Corporate General Counsel and Corporate Secretary Roberta Wieman Vice President DOLE FOOD COMPANY OPERATING DIVISION OFFICERS Paul Cuyegkeng President - Dole Asia William F. Feeney President - Dole Europe Juergen Schumacher President - Dole Latin America Peter M. Nolan President - Dole Packaged Foods Lawrence A. Kern President - Dole Fresh Vegetables Gregory L. Costley President - Dole North America Fruit Roberto Zacarias President - Dole Honduran Beverage (1) EXECUTIVE, FINANCE AND NOMINATING COMMITTEE (2) AUDIT COMMITTEE (3) COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE COMPANY AND SHAREHOLDER INFORMATION THE COMPANY Founded in Hawaii in 1851, Dole Food Company, Inc. is the world's largest producer and marketer of fresh fruit and vegetables, and markets a growing line of packaged foods. The Company does business in more than 90 countries and employs approximately 46,000 full-time people. CORPORATE HEADQUARTERS 31365 Oak Crest Drive Westlake Village, CA 91361 (818) 879-6600 AUDITORS Arthur Andersen LLP 633 West Fifth Street Los Angeles, CA 90071 SECURITIES TRANSFER AND DIVIDEND DISBURSEMENT AGENT The First National Bank of Boston P.O. Box 644 Boston, MA 02102 (800) 733-5001 DIVIDEND REINVESTMENT PLAN A cash dividend of $0.10 per common share was declared in each quarter of 1996 for a total annual dividend of $0.40 per share. Dole Food Company, Inc. does not have a dividend reinvestment plan. INVESTMENT INDUSTRY INQUIRIES Members of the investment industry should direct inquiries to: Office of the Treasurer Dole Food Company, Inc. 31365 Oak Crest Drive Westlake Village, CA 91361 (818) 879-6600 ADDITIONAL INFORMATION REQUESTS For Annual Reports and Forms 10-K, please contact: Office of the Corporate Secretary Dole Food Company, Inc. 31365 Oak Crest Drive Westlake Village, CA 91361 Telephone (818) 879-6814 Facsimile (818) 879-6615 Dole's Annual Report is available on the internet at http://www.dole.com STOCK EXCHANGE Dole Food Company, Inc.'s common stock (DOL) is traded on the New York and Pacific Stock Exchanges. INTERNET ADDRESS: http://www.dole.com http://www.dole5aday.com Dole-Registered Trademark- is a registered trademark of Dole Food Company, Inc. - -C- 1997 Dole Food Company, Inc. All rights reserved. EX-22 7 SUBSIDIARIES EXHIBIT 22 SUBSIDIARIES OF DOLE FOOD COMPANY, INC. There are no parents of the Registrant. Registrant's consolidated subsidiaries are shown below together with the percentage of voting securities owned and the state or jurisdiction of organization of each subsidiary. The names have been omitted for subsidiaries which, if considered in the aggregate as a single subsidiary, do not constitute a significant subsidiary. Subsidiaries of subsidiaries are indented in the following table: Percent of Outstanding Voting Securities Owned as of Subsidiaries of Registrant December 28, 1996 - -------------------------- ----------------- Castle & Cooke Fresh Fruit Company 100% (Nevada) Beebe Orchard Company 100% (Delaware) Dole Citrus 100% (California) Dole Fresh Fruit Company 100% (Nevada) Dole Europe Company 100% (Delaware) Dole Fresh Fruit Europe Ltd. & Co. 100% (Federal Republic of Germany) Dole Fresh Fruit International, Inc. 100% (Panama) Standard Fruit Company 100% (Delaware) Cerveceria Hondurena, S.A. 81% (Honduras) 1 Percent of Outstanding Voting Securities Owned as of Subsidiaries of Registrant December 28, 1996 - -------------------------- ----------------- Castle & Cooke Fresh Fruit Company (cont'd) Standard Fruit Company de Costa Rica, S.A. 100% (Costa Rica) Standard Fruit and Steamship Company 100% (Delaware) Wells & Wade Fruit Company 100% (Washington) Castle & Cooke Worldwide Limited 100% (Hong Kong) Dole Fresh Fruit International, Limited 100% (Liberia) Solvest, Ltd. 100% (Bermuda) Standard Fruit de Honduras, S.A. 100% (Honduras) Dole Europe B.V. 100% (Netherlands) Pascual Hermanos 91% (Spain) Soleil Holding France S.A. 100% (France) Saman, S.A. 100% (France) Dole Chile S.A. 100% (Chile) 2 Percent of Outstanding Voting Securities Owned as of Subsidiaries of Registrant December 28, 1996 - -------------------------- ----------------- Castle & Cooke Worldwide Limited (cont'd) Dole Thailand Limited 64% (Thailand) Compania Financiera de Costa Rica, S.A. 100% (Costa Rica) Dole Bakersfield, Inc. 100% (California) Dole Fresh Vegetables, Inc. 100% (California) Bud Antle, Inc. 100% (California) Dole Carrot Company 100% (California) Royal Packing Co. 100% (California) Dole Japan, Ltd. 100% (Japan) Dole Land Company, Inc. 100% (Hawaii) Dole Philippines, Inc. 99% (Republic of the Philippines) Earlibest Orange Association, Inc. 100% (California) 3 Percent of Outstanding Voting Securities Owned as of Subsidiaries of Registrant December 28, 1996 - -------------------------- ------------------ S & J Ranch, Inc. 100% (California) Dole Nut Company 100% (California) M K Development, Inc. 100% (Hawaii) Dole Dried Fruit and Nut Company, a California general partnership 100% La Petite d'Agen, Inc. 100% (Hawaii) Cerulean, Inc. 61% (Hawaii) Muscat, Inc. 100% (Hawaii) Calicahomes, Inc. 100% (California) Castle & Cooke Land Company, Inc. 100% (Hawaii) Zante Currant, Inc. 100% (Hawaii) Blue Anthurium, Inc. 100% (Hawaii) Delphinium Corporation 100% (Delaware) 4 Percent of Outstanding Voting Securities Owned as of Subsidiaries of Registrant December 28, 1996 - -------------------------- ----------------- Blue Anthurium, Inc. (cont'd) Calazo Corporation 100% (Arizona) Cerulean, Inc. 39% (Hawaii) Alyssum, Inc. 100% (California) Dole Arizona Dried Fruit and Nut Company 100% (California) Lindero Property, Inc. 100% (California) Malaga Company, Inc. 100% (California) Waialua Sugar Company, Inc. 100% (Hawaii) 5 EX-23 8 CONSENT OF ACCTS EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated February 6, 1997 in this Form 10-K into Dole Food Company, Inc.'s previously filed Registration Statements on Form S-3 Registration Nos. 33-41480 and 33-64984 and Form S-8 Registration Nos. 2-87475, 33-594, 33-28782, 33-60643, 33-60641, 33-42152, 333-13739 and 333-06949. /s/ ARTHUR ANDERSEN LLP Los Angeles, California March 28, 1997 EX-27 9 FDS
5 1,000 12-MOS DEC-28-1996 DEC-31-1995 DEC-28-1996 34,342 0 580,020 61,754 526,052 1,125,824 1,635,058 610,923 2,486,807 661,930 903,807 0 0 320,476 229,084 2,486,807 3,840,303 3,840,303 3,256,345 3,256,345 0 0 68,699 108,531 19,500 89,031 0 0 0 89,031 1.47 1.47 THE COMPANY'S FISCAL YEAR ENDS ON THE SATURDAY CLOSEST TO DECEMBER 31. FISCAL YEAR 1996 CONSISTS OF 52 WEEKS AND ENDS ON DECEMBER 28, 1996. ALL QUARTERS IN 1996 HAVE 12 WEEKS, EXCEPT THE THIRD QUARTER OF 1996 WHICH HAS 16 WEEKS.
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