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Dole Food Co Inc – ‘8-K’ for 10/21/13 – EX-99.1

On:  Tuesday, 10/22/13, at 9:30am ET   ·   For:  10/21/13   ·   Accession #:  1193125-13-406103   ·   File #:  1-04455

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/22/13  Dole Food Co Inc                  8-K:7,8,9  10/21/13    3:347K                                   RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     19K 
 2: EX-99.1     Miscellaneous Exhibit                               HTML    233K 
 3: EX-99.2     Miscellaneous Exhibit                               HTML      8K 

EXHIBIT 99.1

EXCERPTS FROM PRELIMINARY OFFERING MEMORANDUM

DATED OCTOBER 21, 2013

As used in this Exhibit, unless the context otherwise requires or indicates, the following terms have the following meanings:

1

Information presented herein on a “pro forma basis” gives effect to the Transactions and certain related transactions more fully described under “Unaudited Pro Forma Condensed Consolidated Financial Statements.”

2

Summary Pro Forma Consolidated Financial Information

The following table sets forth a summary of our consolidated financial data for the periods indicated.

We have derived the summary consolidated financial data for the LTM period ended June 15, 2013 from the audited consolidated financial statements and the unaudited condensed consolidated financial statements including in Dole’s previously filed periodic reports, which, in the opinion of our management, have been prepared on the same basis as the audited financial statements and reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our results of operations and financial position for such periods. We have derived the pro forma financial data for the LTM period ended June 15, 2013 from the unaudited pro forma condensed consolidated statements of operations included herein.

3

4

5

Reconciliation of Net Income to EBIT before discontinued operations, Adjusted EBITDA and Pro Forma Adjusted EBITDA

6

7

USE OF PROCEEDS

The following table summarizes the estimated sources and uses of funds in connection with the Transactions as if the Transactions have occurred on June 15, 2013. Actual amounts set forth in the table and the accompanying footnotes will vary from estimated amounts depending on several factors, including our estimate of fees and expenses. You should read the following together with the information included under “The Transactions” and “Unaudited Pro Forma Condensed Consolidated Financial Statements.”

8

CAPITALIZATION

The following table sets forth our consolidated cash and cash equivalents and capitalization as of June 15, 2013 on an actual basis and on a pro forma basis.

You should read this table in conjunction with “Summary—Summary Historical and Pro Forma Consolidated Financial Information,” “Use of Proceeds,” “Unaudited Pro Forma Condensed Consolidated Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Result of Operations” and our unaudited condensed consolidated interim financial statements and related notes for the second quarter of fiscal year 2013 and other information incorporated by reference into this offering memorandum.

9

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial statements (the “pro forma financial statements”) are derived from the historical financial statements of Dole incorporated by reference herein. The historical financial statements have been adjusted to give effect to the Transactions.

The unaudited pro forma condensed consolidated financial statements were prepared to illustrate the estimated effects of the Transactions. The pro forma condensed consolidated balance sheet gives effect to the Transactions as if the Transactions had occurred as of June 15, 2013. The pro forma condensed consolidated statements of operations for the half year ended June 15, 2013, the half year ended June 16, 2012, and for the fiscal year ended December 29, 2012 give effect to the Transactions as if they had occurred as of January 1, 2012, the first day of the 2012 fiscal year. The pro forma adjustments are based upon available information and certain assumptions that Dole believes are reasonable. The pro forma financial statements do not purport to represent what Dole’s results of operations or financial condition would actually have been had the Transactions in fact occurred as of such date or to project Dole’s results of operations or financial condition.

The Merger will be accounted for as a step-acquisition using the purchase method of accounting at the Parent level with the related purchase accounting pushed down to Dole. Using step-acquisition accounting, the total fair value of Dole as of the date the Merger is consummated will be allocated to the assets acquired and liabilities assumed based upon their fair values. A preliminary allocation of the purchase price has been made to major categories of assets and liabilities in the accompanying pro forma financial statements based on Dole’s preliminary estimates. The actual allocation of purchase cost and the resulting effect on income from operations may differ significantly from the pro forma amounts included herein. To the extent that additional value is assigned to property, plant and equipment and amortizable assets, the value of goodwill will be reduced. In addition, depreciation and amortization expense may increase or decrease from the amounts presented in the accompanying statements if the adjustments to amortizable assets change.

Our historical financial statements have been adjusted in the pro forma financial statements to give effect to events that are (1) directly attributable to the Transactions, (2) factually supportable and (3) with respect to the condensed consolidated statements of operations, expected to have a continuing impact on Dole. The unaudited pro forma condensed consolidated statements of operations do not reflect any non-recurring charges directly related to the Transactions that have already been incurred or will be incurred. However, the impact of these non-recurring charges has been reflected in the unaudited pro forma condensed consolidated balance sheet. These non-recurring charges are further described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. The pro forma condensed consolidated financial statements should be read in conjunction with the accompanying notes to the pro forma condensed consolidated financial statements.

10

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 15, 2013

(Dollars in thousands)

11

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE HALF YEAR ENDED JUNE 15, 2013

(Dollars in thousands)

12

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE HALF YEAR ENDED JUNE 16, 2012

(Dollars in thousands)

13

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 29, 2012

(Dollars in thousands)

14

Notes to unaudited pro forma condensed consolidated financial statements (Dollars in thousands unless otherwise specified):

The purchase accounting adjustments to inventory primarily relates to the value of un-harvested product, mainly pineapples and bananas, at the date of acquisition. The estimated fair value of inventory is based upon the estimated selling price of the inventory less a margin for the selling and distribution effort and additional growing costs to be incurred prior to the harvest. The purchase accounting adjustment to property, plant and equipment primarily reflects the step-up of land, buildings, machinery and equipment and cultivations. The estimated fair value of the inventory and the property, plant and equipment has been based upon current market conditions and similar valuations performed in the past and represent preliminary estimates. The estimated fair value of the actively marketed land is based upon preliminary internal valuations performed taking into account market data.

The purchase accounting adjustment to other long-term liabilities represents an adjustment of approximately $49 million to reduce the pension plan liabilities to their estimated net funded status as of June 15, 2013. This purchase accounting adjustment has been offset by a liability of $1 million related to pre-combination compensation cost associated with Dole’s restricted stock awards (refer to Note (5) for further information). As a result, the net pro forma adjustment to other long-term liabilities is $48 million.

15

For purposes of these pro forma adjustments to deferred taxes, the U.S. federal and state statutory rate of 37.5% has been used for all periods presented.

Dole’s management has estimated that approximately $402 million of the fair value of Dole relates to its trademarks and trade names, which have an indefinite life and as such, will not be amortized but will be periodically tested for impairment. Additionally, Dole’s management has estimated that approximately $37 million of the fair value to Dole relates to customer relationships with finite lives, which will be amortized over their respective estimated useful lives of ten years and periodically be tested for impairment. The final determination of the estimated useful lives of the customer relationships may vary significantly from the preliminary useful life determined for pro forma purposes.

The estimated fair value of Dole’s trademarks and trade name were valued using a discounted cash flow analysis using the relief from royalty method. The cash flows are sensitive to certain assumptions such as royalty rates, estimated cost of capital, revenue projections and expected tax rates and the final valuation may vary significantly from Dole’s preliminary analysis.

16

Mr. Murdock will contribute approximately 36 million shares of common stock of Dole Food Company to Parent. Immediately upon receipt, Parent will contribute the shares to Merger Sub as equity. Merger Sub will merge with and into Dole Food Company, and Dole Food Company will be the surviving entity. In determination of the fair value of Dole as of the consummation date of the Merger, the shares not already owned by Mr. Murdock or his affiliates were valued at $13.50 per share and the approximately 36 million shares already owned by Mr. Murdock and his affiliates have been preliminarily valued at $371 million. Under the accounting rules, the valuation of the shares currently held by Mr. Murdock or his affiliates are required to reflect a minority interest discount, and for purposes of the pro forma financial statements, this discount has been preliminarily based on the unaffected share price of $10.43 per share on May 8, 2013. As a result, the 35.6 million shares currently owned by Mr. Murdock or his affiliates have been preliminarily valued at $371 million for financial accounting purposes. The actual discount applied to these shares when the final determination of the fair value of Dole has been determined may vary from the fair value used for pro forma purposes.

Each stock option outstanding at the time of the Merger, whether vested or unvested, will automatically be converted into the right to receive cash in an amount equal to the difference between $13.50 per share and the exercise price of the stock option. Dole expects to pay approximately $7 million upon consummation of the Merger to settle the vested and unvested stock options. Dole expects that approximately $6 million of the payment will be attributed to pre-combination compensation cost, and as a result, this amount has been reflected in the fair value calculation above. The portion of the payment that does not relate to pre-combination compensation costs will be recognized as an expense in Dole’s successor financial statements upon the consummation of the Merger. This cost has not been reflected in the pro forma condensed consolidated statement of operations because it is a one-time nonrecurring cost.

In addition, each share of restricted stock and restricted stock units outstanding at the time of the Merger will automatically be converted into the right to receive $13.50 in cash

17

for each share outstanding. The cash will be paid upon the vesting date of the applicable award as originally determined, subject to the continued employment of the holder of the award. As a result, these awards will not be immediately settled upon the consummation of the Merger. Dole has attributed $0.9 million of costs associated with these options to pre-combination costs, and as a result, this amount has been reflected in the fair value calculation above.

Mr. Murdock will contribute approximately 36 million shares of common stock of Dole Food Company (that have been preliminary valued at $371 million, using the unaffected price of $10.43 per share on May 8, 2013, as required by accounting rules) and $215 million of cash to Parent. The shares and cash will then be contributed to Merger Sub as equity. Merger Sub will merge with and into Dole Food Company, and Dole Food Company will be the surviving entity.

18

The transaction fees and costs represent the third party estimated transaction costs associated with the Transactions that will be recognized as expense in Dole’s financial statements. The write-off of deferred debt issuance costs reflects the write-off of capitalized costs associated with the Existing Term Loan and Existing Revolving Credit Facility. The share based compensation expense represents expense that will be recognized by Dole upon the consummation of the Merger related to the acceleration of unvested stock options (see Note (5) for further information).

The pro forma adjustments made to property, plant and equipment and the definite lived intangible assets are being amortized over fifteen and ten years, respectively. The final determination of the estimated useful lives of these assets may be significantly different than the estimated useful lives determined for pro forma purposes. Not included in the pro forma adjustment to cost of products sold for the half year ended June 16, 2012 and the year ended December 29, 2012 is $34.7 million of additional inventory costs that will be recorded to cost of products sold as the underlying inventory is sold. Since this adjustment will not have a recurring impact and is less than twelve months in duration, it has been excluded from the pro forma adjustments above.

19

The pro forma interest expense for the notes offered herein and for the New Term Loan has been computed using a weighted average interest rate of 5.3%. Of the $32 million of estimated debt issuance costs expected to be incurred, approximately $9 million of these costs are associated with the notes offered herein and approximately $23 million of these costs are associated with the New Term Loan and the New ABL Facility. These costs are being amortized over their expected term of five and a half years for the notes offered herein, five years for the New Term Loan and four and a half years for the New ABL Facility.

An increase or decrease of 0.125% in the weighted average interest rate of the New Term Loans and the notes offered herein would change the annual pro forma interest expense by $1.3 million.

20

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Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing		Date		Other Filings
		4/1/20
		4/1/18
Filed on:		10/22/13		DEFA14A
For Period End:		10/21/13		DEFA14A
		10/3/13		DEFM14A,  PRER14A,  SC 13E3/A
		9/19/13		8-K
		8/19/13		8-K
		8/11/13		8-K
		6/15/13		10-Q
		5/8/13		8-K
		5/2/13		10-Q,  8-K,  8-K/A
		4/1/13		4,  8-K
		12/29/12		10-K
		6/16/12		10-Q
		1/1/12
		10/15/08		8-K
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Filing Submission 0001193125-13-406103   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

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