Dole Food Company Inc. (NYSE:DOL) Tuesday announced that its net loss for the third quarter of 2001 was $94.8 million or $1.68 per share as compared to a net loss of $7.4 million or 13 cents per share for the third quarter of 2000.
The net loss for the third quarter of 2001 included $104.8 million of non-recurring pre-tax expense (included in cost of products sold) primarily related to asset write-downs and severance resulting from previously announced business reconfiguration programs initiated during the quarter. The net loss for the third quarter of 2000 included Hurricane Mitch insurance proceeds and a gain on sale of the company’s California and Arizona citrus assets offset by a business downsizing charge.
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Excluding one-time items, net income from ongoing operations was $8.3 million or 15 cents per share for the third quarter of 2001 compared with a net loss from ongoing operations of $1.3 million or 2 cents per share for the third quarter of 2000. This year-over-year improvement of $9.6 million resulted from increased pre-tax earnings from operations of $5.9 million coupled with a $7.9 million reduction in interest expense, offset by higher income taxes.
The above-mentioned $104.8 million of business reconfiguration expenses in the third quarter of 2001 were for the divestiture of the company’s Pascual Hermanos vegetable business in Spain, the planned sale of certain other non-core businesses in Europe, the downsizing of banana and flower operations in Latin America and banana production in the Philippines.
Earnings before interest and taxes (“EBIT”) from ongoing operations in the company’s fresh fruit segment increased due to the continuing trend of improved earnings in its banana operations largely as a result of significant cost-cutting activities, increased volumes and pricing in North America and favorable banana pricing in Europe. Earnings from ongoing operations in the company’s fresh vegetables segment were lower primarily due to commodity vegetables pricing in North America, which, although above normal, were below their heightened levels of a year ago. EBIT from ongoing operations in the processed foods segment increased due to the continued success of Dole’s FRUIT BOWLS® products partially offset by marketing costs related to the launch of its new FRUIT-N-GEL BOWLS(TM). Earnings in the company’s fresh-cut flowers segment were lower due to reduced sales volumes and $3.1 million of building lease terminations incurred as the company prepares to move to its new centralized facility.
Lawrence A. Kern, president and chief operating officer, stated: “The earnings in our banana business are particularly encouraging in what is traditionally a softer quarter and reflect the positive impact of our cost-cutting initiatives. These earnings also reflect the strengthening of banana pricing in North America and Europe, although this increase was partially offset by weaker currency exchange rates, primarily the Japanese yen, versus those of the comparable period of 2000. We are also very pleased with the success of our processed food products, especially our most recently introduced FRUIT-N-GEL BOWLS. One area of disappointment is our fresh-cut flowers segment where continued integration challenges combined with unfavorable market conditions have slowed our planned repositioning of this business. We are encouraged by the progress we have made in implementing additional reconfiguration programs in this segment, which we believe will result in positive future earnings.”
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By GlobalDataRevenues for the third quarter of 2001 totaled $1.33 billion compared with revenues of $1.34 billion for the same quarter of last year. Cash flow from ongoing operations (“EBITDA”) in the third quarter of 2001 totaled $74.4 million compared with $70.1 million for the same quarter of 2000. Interest expense decreased significantly to $22.2 million for the third quarter of 2001 from $30.2 million for the third quarter of 2000 primarily due to lower average debt levels combined with lower interest rates.
On a year to date basis, revenues for 2001 decreased slightly to $3.67 billion from $3.70 billion for 2000. Year-to-date EBITDA totaled $303.1 million for 2001 compared with $286.3 million for 2000. Year-to-date interest expense decreased to $62.5 million from $76.9 million for 2000 for the aforementioned reasons.
The company is continuing its efforts to negotiate a final sale agreement for its Honduran beverage business prior to the end of the year. While management anticipates a sizeable gain from the sale of this business as well as a significant reduction in interest expense as a result of the debt pay-down facilitated by the transaction proceeds, the absence of earnings from this business will result in a net dilution to the company’s earnings per share of approximately 22 cents in 2002. The company estimates that this dilution will be mostly offset by the various cost savings expected to be generated in 2002 from the reconfiguration programs in process.
Dole Food Company Inc., with 2000 revenues of $4.8 billion, is the world’s largest producer and marketer of high-quality fresh fruit, fresh vegetables and fresh-cut flowers, and markets a growing line of packaged foods.
This release contains forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements, which are based on management’s current expectations, are generally identifiable by the use of terms such as “believes,” “anticipates,” “will,” “estimates,” “expects,” and similar expressions. The potential risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein include weather-related phenomena; market responses to industry volume pressures; product and raw materials supplies and pricing; electrical power supply and pricing; changes in interest and currency exchange rates; economic crises in developing countries; quotas, tariffs and other governmental actions; international conflict; and the ability of the company and its European customers and suppliers to complete euro conversion efforts. Further information on the factors that could affect Dole’s financial results is included in its SEC filings, including its Annual Report on Form 10-K.
DOLE FOOD COMPANY INC
Summary of Consolidated Operations
Quarter Ended Three Quarters Ended
October 6, October 7, October 6, October 7,
2001 2000 2001 2000
(in 000s, except
per-share amounts)
Revenue $ 1,331,702 $ 1,338,259 $ 3,669,802 $ 3,700,618
Cost of
products
sold 1,227,176 1,161,121 3,174,733 3,122,106
Gross margin 104,526 177,138 495,069 578,512
Selling,
marketing and
administrative
expenses 177,156 158,157 430,184 410,810
Hurricane Mitch
insurance
proceeds
— net — (42,506) — (42,506)
Business
downsizing
charge — 45,761 — 45,761
Gain on
sale of
citrus assets — (8,142) — (8,142)
Operating
income
(loss) (72,630) 23,868 64,885 172,589
Interest income 2,358 8,829 4,759 12,886
Other income
(expense)
— net (38) 706 5,741 548
Earnings
(loss) before
interest and
taxes (70,310) 33,403 75,385 186,023
Interest
expense 22,240 30,148 62,514 76,945
Income
(loss) before
income taxes (92,550) 3,255 12,871 109,078
Income taxes 2,206 10,605 35,941 34,905
Net income
(loss) $ (94,756) $ (7,350) $ (23,070) $ 74,173
Net income
(loss) per
common share
Basic $ (1.68) $ (0.13) $ (0.41) $ 1.33
Diluted (1.68) (0.13) (0.41) 1.33
Diluted
average
number of
common shares
outstanding 56,466 55,857 56,248 55,920
