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Executives

Beth Potillo - Senior Vice President and Treasurer

C. Michael Carter - President, Chief Operating Officer, Director and Member of Executive Committee

Keith C. Mitchell - Chief Financial Officer and Vice President

Yoon J. Hugh - Chief Accounting Officer, Senior Vice President and Controller

Analysts

Heather L. Jones - BB&T Capital Markets, Research Division

Jonathan P. Feeney - Janney Montgomery Scott LLC, Research Division

Kevin Tracey

Ryan Oksenhendler - BofA Merrill Lynch, Research Division

Dole Food (DOLE) Q1 2013 Earnings Call May 2, 2013 4:45 PM ET

Operator

Good day, ladies and gentlemen, and welcome to the Quarter 1 Dole Food Company Earnings Conference call. My name is Matthew, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And now I would like to turn the call over to Beth Potillo, Senior Vice President and Treasurer. Please proceed, ma'am.

Beth Potillo

Thank you, Matthew. Good afternoon, everyone, and welcome to Dole's first quarter earnings conference call. Joining me on the call today are Michael Carter, Keith Mitchell and Yoon Hugh.

Earlier today, we filed our first quarter 2013 Form 10-Q and issued our earnings release. The release, along with slides which include segment results and reconciliation to GAAP measurements, are available at investors.dole.com.

Today's call will last approximately 1 hour and will focus on the new Dole and it's continuing operations. After our prepared remarks, we will take questions as time allows.

Some of the information we will discuss today contains forward-looking statements about the company's performance based upon management's current expectations. Given the risk and uncertainties inherent in our business, actual results may ultimately differ materially from these expectations. Further information on the factors that could affect Dole's financial results is included in our SEC filings, including Form 10-K and the forward-looking statements at the beginning of the slides.

Management evaluates and monitors the overall company and segment performance primarily through a number of non-GAAP measures, including EBIT, adjusted EBITDA from continuing operations and comparable income, loss, total and per share, from continuing operations. Some of today's prepared remarks will include these measures. Information on how we calculate these measures and reconciliations to GAAP financial measures can be found in the earnings release, as well as in the slides.

I would now like to turn the call over to Michael, who will discuss the performance of our continuing operations. Keith will follow-up with a discussion of our financial results.

C. Michael Carter

Thanks, Beth. Good afternoon, everybody. Thanks for joining our call today and for your interest in Dole.

This is our first investor call as the new Dole. On April 1, we completed the sale of Dole's former Worldwide Packaged Foods and Asia Fresh businesses to ITOCHU Corporation for $1.685 billion in cash, subject to post-closing adjustments.

Dole continuous as an international commodity produce company, with inherently more volatile earnings on a smaller footprint, retaining its Fresh Vegetables and remaining Fresh Fruit businesses.

We're off to an extraordinary start in 2013, with a record-setting early approval from China's Ministry of Commerce, we were able to achieve the timely completion of the ITOCHU sale transaction.

The timeliness of the closing of this large valuation transaction positioned us to obtain a very efficient, much lower cost new capital structure.

This new capital structure, together with the proceeds of the sale transaction, enabled us to pay off Dole's previous indebtedness of approximately $1.7 billion, which included the settlement in full of approximately $50 million in existing capital lease obligations related to 2 of our vessels.

Our new capital structure also permits us to resolve some long-standing legacy exposures while also providing needed financial flexibility to enhance shareholder value.

Dole's new capital structure reflects the now-completed successful syndication of our upsized, $675 million term loan at LIBOR plus 2.75% with a 1% LIBOR floor and our upsized $180 million revolver at LIBOR plus 2.75%.

After the repayment of our previous indebtedness, the transaction-related taxes, costs and expenses, the extinguishment of the long-term Japanese yen hedges of JPY 25.1 million, the European Commission's fine of EUR 45.6 million and the expected resolution of the Honduras tax case, our new debt will be approximately $440 million with a resulting net leverage ratio of approximately 2.9x based on Dole's 2013 adjusted EBITDA guidance.

Now for Dole's first quarter results and updated guidance. Today, we reported adjusted EBITDA from continuing operations of $34 million.

Excluding an additional $34 million charge due to the previously announced EU General Court antitrust decision, adjusted EBITDA improved to $68 million, compared to $44 million in the first quarter 2012.

First quarter adjusted EBITDA from both of our remaining lines of business exceeded last year. Dole's first quarter performance is in line with our full-year expectations for 2013 at the low end of the guidance range of $150 million to $170 million.

For Fresh Fruit, earnings grew in all of our product lines. Banana earnings increased, primarily due to higher volume and pricing in Europe and lower Latin American fruit cost, as well as lower shipping costs.

Volumes in North America were flat, with pricing lower than last year. Current industry supplies are ample, but no tightness or shortage.

The industry is bringing in approximately 190,000 to 200,000 boxes per week into North America than the same time last year.

Earnings from pineapples increased as a result of improved pricing in North America and Europe, despite lower volumes due to tight industry supply in the first quarter. We expect higher industry supplies in the second quarter, putting downward pressure on prices.

Chilean deciduous fruit earnings increased primarily due to improved pricing, partially offset by higher product costs.

Fresh Vegetables earnings for the first quarter increased from $13 million, in 2012, to $24 million, driven by higher earnings in fresh-packed products, offset by lower earnings from value-added and berry products.

Fresh-packed earnings improved as prices in most commodity vegetables increased as a result of tight industry supplies, caused by cold weather in the Yuma growing region.

Value-added prices increased on higher retail volumes. However, earnings decreased as the tight supply in commodity vegetables resulted in higher purchasing and manufacturing costs.

Now the first quarter is a good example of the complementary nature of both our value-added and fresh-packed businesses.

During a product shortage, we are able to benefit from higher fresh-packed prices, offsetting increased cost in value-added.

Berry earnings decreased as a result of higher growing and harvesting costs and lower pricing for strawberries. This decline is attributable to prolonged adverse weather conditions in our legacy strawberry growing regions.

Looking to the second quarter, there is volatility in earnings from both of our fresh produce businesses, as we are currently seeing in the downward swing from the first to the second quarter this year.

This is contrary to Dole's typical earnings pattern and at present, we expect second quarter adjusted EBITDA to approximate half of first quarter adjusted EBITDA excluding the $34 million charge, with lower earnings from both our fresh fruit and fresh vegetables businesses.

This volatility is especially pronounced in our legacy strawberry business where we expect earnings to be down by $15 million to $20 million in the first half 2013, compared to 2012.

During the last 6 months, our strawberry-growing regions in California have experienced extreme warm weather, followed by unusual cold weather and now warm weather again.

For the full-year 2013, we expect the overall lower earnings in bananas and berries to put pressure on our expected adjusted EBITDA at the low end of the guidance range. The impact of higher expected volumes in these product lines is more than offset by expected lower pricing and higher costs.

I now would like to turn the call over to Keith to go over the financial results in more detail.

Keith C. Mitchell

Thank you, Michael. Good afternoon, all, and thank you for your interest in Dole Food Company.

I will now discuss our performance for the first quarter 2013. To begin with, I would like to point out the fresh produce businesses that remained following the April 1 sale of the Worldwide Packaged Foods and Asia Fresh businesses, are classified as continuing operations.

Results for packaged foods and Asia Fresh are classified as discontinued operations.

In addition, U.S. GAAP results include unrealized gains and losses from currency movements, charges for restructuring, ITOCHU transaction-related costs, as well as gains from asset sales. These items are detailed in the reconciliation of adjusted EBITDA from continuing operations to net income in our earnings release.

My comments will focus on continuing operations. First quarter 2013 revenues decreased 3% to $1.05 billion, primarily as a result of the divestiture of our German ripening and distribution subsidiary.

Excluding sales of $115 million from this divestiture, sales increased 8%, or $82 million.

Favorable foreign currency movements in Europe increased revenues by approximately $8 million.

First quarter 2013 adjusted EBITDA from continuing operations included a $34 million provision in the Fresh Fruit segment associated with the EU antitrust matter.

Excluding this legal provision, first quarter adjusted EBITDA increased $24 million, or 55%, to $68 million.

Gross profit margin, excluding adjustments for unrealized gains and losses on foreign currency and fuel hedges, for the first quarter increased to 10.2% from 8.5%, 9.3% excluding the German divestiture.

For the first quarter 2013, total selling, marketing and general and administrative expenses increased to $69 million or 6.6% of revenue, as compared with the first quarter 2012 expense of $65 million or 6% of revenue. Excluding the German divestiture, 2012 SMG&A was 6.5% of revenue.

Interest expense from continuing operations is much lower than we have reported in the past, as interest expense associated with Dole's notes and debentures, term loans and revolving credit facilities have been reclassified as discontinued operations.

For the first quarter 2013, interest expense was $10.2 million, which included an accrual of $8.7 million associated with the EU antitrust matter.

Annual interest expense on the new term loan will approximate $25 million.

And income tax benefit of $3.9 million was recorded for the first quarter of 2013 compared to a $5.2 million income tax expense in the prior year.

Net cash tax payments for the first quarter of 2013 were $2 million. Net cash tax payments for the full year of 2013 are expected to be $7 million.

These amounts do not include approximately $31 million in cash tax payments for the discontinued operations.

U.S. GAAP earnings per share from continuing operations were income of $0.04 per share for the first quarter, compared to income of $0.29 in the prior year. Comparable income from continuing operations as summarized in Exhibit 3 of today's earnings release was income of $0.12 per share for the first quarter compared with income of $0.24 per share in the prior year.

Excluding the earnings per share impact of the EU antitrust matter of $0.44 per share, comparable income was $0.56 per share.

Now I'd like to discuss our financial results by segment.

In our Fresh Fruit segment, first quarter 2013 revenues decreased to $764 million from $848 million in the prior year. Excluding the first quarter 2012 sales from our divested German subsidiary, Fresh Fruit revenues increased $31 million of 4% from $733 million.

Improved pricing and higher volumes in Europe were partially offset by lower volumes in the Chilean deciduous fruit business and lower North American banana pricing.

Net favorable foreign currency exchange movements in our foreign selling locations increased Fresh Fruit revenues in the first quarter by $8 million.

As previously mentioned, first quarter 2013 adjusted Fresh Fruit EBITDA included a $34 million provision associated with the EU antitrust matter. Excluding this provision, first quarter adjusted EBITDA was $53 million, as compared to $42 million in 2012.

Banana earnings increased primarily due to higher pricing in Europe and lower Latin America fruit costs, as well as lower shipping costs.

Earnings in pineapples increased as a result of improved pricing in North America and Europe, partially offset by higher product costs.

Chilean deciduous fruit earnings increased primarily due to improved pricing, partially offset by higher product costs.

Turning to our Fresh Vegetables segment. First quarter revenues increased 21% to $290 million from $238 million in 2012. Fresh-packed revenues increased 62% as a result of higher pricing across all major vegetable product lines despite lower overall volumes.

Pricing increased as a result of product shortages in the Yuma, Arizona growing region.

In addition, the quarter-over-quarter comparison was also impacted by significantly lower pricing during the first quarter of 2012, due to oversupply conditions.

Value-added revenues increased as a result of improved pricing, higher volumes and favorable product mix. Berry revenues increased, primarily due to higher volumes of strawberries and higher pricing for blueberries, partially offset by lower pricing for strawberries.

Fresh vegetables adjusted EBITDA for the first quarter 2013 increased $10.4 million to $23.8 million. Fresh-packed earnings increased as a result of higher pricing, partially offset by higher growing costs. Value-added earnings decreased slightly as a result of higher purchased vegetable costs as a result of product shortages, partially offset by higher pricing.

Berry earnings decreased as a result of higher growing and harvesting cost and lower pricing for strawberries.

Relating to corporate overhead, first quarter 2013 expenses amounted to $9 million, compared to $11 million in 2012.

I will now discuss some key balance sheet and cash metrics. Total debt at the end of the first quarter of 2013 was approximately $1.5 billion. There was $75 million of borrowings outstanding under our ABL revolver.

After taking into account approximately $86 million of outstanding letters of credit issued under the ABL revolver, we had revolver availability of $176 million.

As Michael mentioned, we have put in place a new capital structure, which includes a new $675 million term loan and a new revolving credit facility that's up to $180 million.

Cash flows used by operating activities for the consolidated company in the first quarter of 2013 was $96 million, mainly resulting from lower earnings and discontinued operations and higher working capital primarily due to seasonality.

Capital expenditures for the first quarter of 2013 were $18 million, compared to $7 million in the prior year. Our current plan includes total capital expenditures of $170 million, of which $65 million to $70 million is normal course of business.

We continue our hedging programs for currency and bunker fuel. For 2013, we have hedged approximately 50% of our net euro cash flow at an average rate of $1.28 per EUR 1 using participating forwards.

We have also hedged 50% of our Chilean peso exposure at an average forward rate of 493 and 50% of our Costa Rica colón exposure for the back half of 2013 at 504.

For the first quarter of 2013, our fuel hedges benefited adjusted EBITDA by $177,000.

For the remainder of 2013, about 30% of our European requirements are hedged at an average swap rate of $565 per metric ton as compared with a current spot rate of $588 per metric ton.

That concludes our prepared remarks. I will now return the call to Michael.

C. Michael Carter

Thank you, Keith. Let me say on behalf of Dole management that we are very excited and very optimistic about the long-term future of the new Dole and its prospects.

With our now more flexible capital structure and the eventual lower cost structure from rightsizing our organization, Dole will be well positioned to pursue growth opportunities within the fresh produce sector.

We will now open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from the line of Heather Jones from BB&T Capital Markets.

Heather L. Jones - BB&T Capital Markets, Research Division

I had a few questions. I guess, first on corporate expense, was wondering what we should be using as a quarterly run rate for share-based comp?

Yoon J. Hugh

Heather, for the quarter, you're saying? Or for the year?

Heather L. Jones - BB&T Capital Markets, Research Division

No. I mean, I looked at it for the quarter, and it seem -- it was larger than I had expected and so I was just wondering -- I didn't know if this was related to the sale, there was like...

Yoon J. Hugh

Yes, it is. Yes. This is Yoon, speaking. Yes, it's a lot larger this quarter because we had acceleration of stock comp related to the ITOCHU transaction. So we had about $6 million this quarter on -- now that includes [indiscernible] related to the ITOCHU stock transaction, to the ITOCHU sale transaction. So on a run rate, probably about half of that amount.

Heather L. Jones - BB&T Capital Markets, Research Division

Okay. Good. And then the thing about Asia, you all exceeded our projection for the Fresh Fruit line and it looks like, if I'm looking at your -- understanding your pro forma numbers correctly, the Asian results were much weaker than we would've expected end Q1 of '12. It looks like they only did a few million dollars, and I'm talking about Asia fresh, only a few million dollars on the EBIT line in Q1 of '12. Am I understanding this correctly?

Yoon J. Hugh

Yes. Asia Fresh had a significant loss in the first quarter in 2013, along with our packaged foods business. On a pretax basis, consolidated, they had pre-tax losses, of all disco-ops, about $23 million and then we offset some taxes that we had to pay related to the sale, obviously, about $46 million. So net loss from our -- all of our discontinued operations is about $69 million for the quarter.

Heather L. Jones - BB&T Capital Markets, Research Division

Actually, I was referring to Q1 of 2012. What did Asia Fresh do that quarter? Because it looks like when I was trying to project Q1 of '13 I was giving too much credit in the year-ago period for Asia. It looks like Asia in fresh only did about a few million dollars in EBIT in Q1 of 2012. Am I -- is that correct?

Yoon J. Hugh

You're right. You're right. You're exactly right. Pretax income was only $2.6 million for Asia Fresh.

Heather L. Jones - BB&T Capital Markets, Research Division

Okay, perfect. And then moving onto the debt, and I'm admittedly a little confused. If we go back to your September presentation, if you look at one of your slides for post-transaction, you're talking about debt being a total of about $260 million. Then you put out a release in early January that talks about a leverage ratio of 1.8x based upon your guidance range of $150 million to $170 million, so that's still like in the $250 million, $270 million range. Then, when you put out a release in April announcing the completion of the sale, you're talking about being levered on the order of 2.5x, which gets you to about $375 million. And now, today, you're talking about $440 million. And when I think about the yen swap, that's $20-some million. The EU settlement is call it $45 million to $50 million. And then in the Honduras tax settlement, but I'm just trying to figure out what else comprises the difference between what you were originally targeting and now this $440 million number?

Beth Potillo

Yes. Heather, it's Beth. You're right there's the yen swap, the settlement, the $25 million, the EU fine, the Honduran tax. Also since year-end there's has been a large use of working capital, both in the continuing operations and the discontinued operations and the additional revolver borrowings just from year-end is well over $100 million. So that, obviously, that's almost a full turn, the money there as well. And some of the things, other differences between that and the 8-K and the pro forma are things like the taxes were put out as a payable and not a reduction of cash and a lot of those taxes have been paid. So there is a -- really a good chunk are those things that we've talked about, the EU fine, the yen swap, as well as the large working capital uses and other operational uses in the first quarter.

Heather L. Jones - BB&T Capital Markets, Research Division

So you said the working capital alone was more than $100 million during the first quarter?

Beth Potillo

It was working capital, CapEx and other items, fuel-related expenses, too. So...

Heather L. Jones - BB&T Capital Markets, Research Division

And will you get any of that working capital related to the discontinued ops was the price paid -- it's...

Beth Potillo

There was no working capital adjustment.

Operator

And the next question comes from the line of Jonathan Feeney from Janey.

Jonathan P. Feeney - Janney Montgomery Scott LLC, Research Division

I wanted to ask about the bananas business in North America. It seems like -- you talked about higher pricing in Europe. That's rolled over a little bit, looks like on a week-over-week basis. But why is there such -- so much worse of a pricing trend, as well. It's like, for the past 3 to 6 months in North America versus Europe, usually it works the other way around, where Europe leads because it's a weekly priced market. And any color you could give us there about that North American market and how you look and feel for -- as we get into this critical high European season?

Keith C. Mitchell

This is Keith Mitchell here. In the North America banana market it's -- not a lot has changed since the past couple calls, it's still a very competitive market. There's no shortage of volume in North America and competition is very aggressive right now, driving down just the annual contract prices. We have not seen a change, yet, in this situation.

Jonathan P. Feeney - Janney Montgomery Scott LLC, Research Division

And why is that so different than what -- I mean, at least until recently, was going on in Europe. It seems -- why it worked differently this time, do you think? Is supply coming from different places? Are U.S. retailers increasing their bargaining power? I'm just trying to understand what dynamics might be different.

Keith C. Mitchell

I think it's probably both. The U.S -- the retailers are certainly more aggressive and there is ample supply of volume out there, so they can be. And at the same time, you have very aggressive moves by the competition as well. So all this is squeezing, squeezing the pricing in North America.

Jonathan P. Feeney - Janney Montgomery Scott LLC, Research Division

Okay. And I guess I wanted to follow-up with Beth or Heather's question, here. So from the original time of the announcement, and I just -- I may be missing something here, was $270 million in net debt, was what you were thinking about and $440 million is what we're talking about today. I think you just told us that CapEx was only $18 million in the first quarter. The yen, and correct me if I'm wrong, but the yen collapsed from the time you told us that -- the yen hedge was going to cost you a lot more at the time of that $260 million that it wound up costing you. I think it was going to cost you something like $80 million, and it only wound up costing you $25 million.

Yoon J. Hugh

We didn't include anything for the yen hedge. That was decided at a later date.

Jonathan P. Feeney - Janney Montgomery Scott LLC, Research Division

I see. The original $260 million didn't include a projection for that?

Yoon J. Hugh

Exactly.

Jonathan P. Feeney - Janney Montgomery Scott LLC, Research Division

And the original $270 million didn't include $100 million or so of working capital then?

Yoon J. Hugh

No, it did not.

Operator

The next question comes from the line of Kevin Tracey from Oberon Asset Management.

Kevin Tracey

I guess, I wanted to ask about -- on the last call you mentioned that the future capital needs to replace your fleet, and you've mentioned the fleet is quite old, and I think you said the cost to replace one vessel is $50 million. And I guess I'm just wondering, over the next 3 to 5 years, what's your kind of expectation on how many vessels will need to be replaced?

C. Michael Carter

Kevin, you recall from probably the last time we talked about the 3-ship rotation that we have out on the West Coast. That's the one that has our primary interest. That ship rotation continues, but we see some real opportunity to expand our capacity because of opportunities we see. So we will be addressing those. There are lots of ways to deal with a new ship upgrades. We'll be looking at that, but that's the area that will be our focus in the near term.

Kevin Tracey

Okay. Okay, I see. And then just secondly, kind of, a general question. On the last call you also talked about the attractive, I guess, rates of return of buying farms. And I guess with this new financial flexibility you have, I guess I'm wondering how big is that opportunity to invest in these new farms? And just generally, what do you expect to deploy future capital on to grow the business?

C. Michael Carter

Well we did talk and we continue to think in terms of this strategic advantage in gaining more of the grower margin than we currently have because of the mix between owned and produced -- and purchased, but we have to also be opportunistic about farm acquisitions. If we put too much pressure out there, the prices go up. We bought some farms in Ecuador. We've kind of backed off a little bit while we see how things kind of settle down. So it's a matter of -- strategically, that's the direction we would like to go because we see the opportunity in growing some of our margin. On the other hand, we have to also be opportunistic about it in terms of the way we go about trying to acquire them. So nothing has changed in terms of our strategic thinking, but it's more a timing thing and also what's really happening in the marketplace.

Operator

Your next question comes from the line of Ryan Oksenhendler of Bank of America.

Ryan Oksenhendler - BofA Merrill Lynch, Research Division

I guess -- my question, I guess, regarding the outlook for the full year, could you just give a little bit more explicit guidance? It sounds like you're actually going to come in below the range and is that a function of just strawberry EBIT coming in below what you thought it was at the beginning of the year? Or has something else changed?

Keith C. Mitchell

Ryan, you saw that we -- that I've mentioned about there being some pressure on the low end. We're not calling down below the low end. We are also, however, recognizing there is some pressure we're seeing. We purposely wanted an appreciation of what has taken place now in the legacy strawberry space, the kind of order of magnitude year-over-year we're seeing there. We do see some pressure from both our berry side, and here I'm talking really strawberries, and also on the banana side now. It was interesting, we do see volume -- we're not really losing volume, but we are seeing more price challenges and more cost challenges. So again, it's more recognizing that, that low end is where we are and -- but we are also seeing some pressure on it. But we're holding to it.

Ryan Oksenhendler - BofA Merrill Lynch, Research Division

Well, I guess, in terms of then going back to, I think, you issued the guidance in January and then you said you pointed to the low end in February and I think that was before you had any issues with strawberry. So now if strawberries are going to be worse than expected, I guess, what's a little bit better that kind of gets you to that low end?

C. Michael Carter

Well even when we -- no, back then, we were seeing some of the developments in strawberry, we just didn't highlight them at that time. What we're also seeing though is some of the -- some of that continuing in the second quarter. That offset some of the other things that we are also seeing. So it wasn't that we didn't see the developments on the strawberry side, because this weather pattern that we mentioned goes back to the latter part of last year, the hot to the cold to the hot, which has definitely impacted that area. And we, more recently, have had to take more of our strawberries into juice or to the freezer and some of it even to juice. And that has also affected us in terms of pricing and costs.

Operator

Your next question is from the line of John McCullough [ph] from WHP Investment Management [ph].

Unknown Analyst

So first off, it sounds like strawberries isn't necessarily a kind of industry problem, it's just kind of a weather-related issue that you can correct. It's not a competitive industry issue, correct?

C. Michael Carter

Yes, it's really a weather-related issue. Yes.

Unknown Analyst

So then, touching back on bananas, I guess, looking back at the cycles or looking at back at the industry, when -- historically, when there's been sort of pricing pressure or competitive pricing pressure, what has been the one thing or 2 things that's changed it?

C. Michael Carter

Usually, it's weather, which would impact supply, which creates some opportunity on the price side.

Unknown Analyst

Okay. Perfect. And then just -- and this is just a small thing, but I look at your press release and it says, "The comps call for investors to discuss first quarter results, new cap structure and share repurchase program." I just haven't heard anything about share repurchase program yet. Is that because there is none or we're not -- that's not being discussed?

C. Michael Carter

What press release are you referring to?

Unknown Analyst

Not -- the news release.

C. Michael Carter

A news release?

Unknown Analyst

On the earnings news release?

C. Michael Carter

We have nothing out there that talks about a share repurchase program.

Unknown Analyst

Maybe I'm looking at the wrong one then.

C. Michael Carter

Maybe you're looking at Del Monte. They just announced one.

Unknown Analyst

No. I think I'm looking at your guys company's news release. Let's see here. It says, "Company will hold conference call investors to discuss first quarter results, new cap structure and share purchase -- repurchase program."

C. Michael Carter

Well I'm not sure what you're looking at there. We're looking to see what that is. But we have nothing to say in terms of that. It is fair to say though that given that we have this ITOCHU deal behind us, we have, now, a more flexible capital structure in place. Our board does look at the opportunities we have in order to enhance shareholder value including acquisitions and some of the things that we've also talked about.

Operator

[Operator Instructions] The next question comes from the line of Heather Jones from BB&T Capital Markets.

Heather L. Jones - BB&T Capital Markets, Research Division

So I was just looking at your Q and it looks like the cash from operations was a use of cash of $96 million this quarter, compared to $14 million last year, and it's a pretty negative delta on almost all your -- on all the working capital fronts. I'm just wondering why working capital was such a large use of cash this quarter as compared to last year?

C. Michael Carter

I think the working capital, if you net it all out, it's about $16 million use. Is that -- I think that's right. And some of the working capital -- I think, hopefully that's right. And your question is compared to last year or is it just compared from year end?

Heather L. Jones - BB&T Capital Markets, Research Division

It's merely just last year. I was looking at the receivables figure and, specifically, I was looking at payables and receivables. Like receivables was a use of cash of like about $40 million more than it was last year, and then -- so I was just wondering what drove that.

Yoon J. Hugh

Heather, this is Yoon. On the receivables side, we actually had higher sales in vegetables so a lot of it had to do with higher sales volume as well -- not only comparing one period of time, so that's contributing the receivables fluctuation there. On the payables side, it's actually, quite frankly, just timing in our divisions. But net-net, when you look at the net of our working capital, it's not significant in terms of when you net the receivables and payables and all of our working cap accounts together. The biggest driver of this significant use of cash is really due to, unfortunately, the net loss that we had, coming mostly from Asia Fresh and packaged foods.

Heather L. Jones - BB&T Capital Markets, Research Division

Okay. Okay. And the receivables, so right now, you're at about $440 million in debt, but later this year we should be getting some of those receivables back?

Yoon J. Hugh

Yes.

Heather L. Jones - BB&T Capital Markets, Research Division

Okay. And I know you're saying you're not, but I think what that -- the prior question or -- it's on Page 3 of you all's press release, underneath the conference call heading. That first sentence talks about a share repurchase program. So I think that's where that's coming from.

C. Michael Carter

Yes, we see that. That was an oversight and a mistake.

Operator

Your next question comes from the line of [indiscernible] who's a private investor.

Unknown Shareholder

My question is about your lease terms with the Four Seasons. I know you have a land there. I just wondered on what the lease term is and are you guys getting market rate of return?

Beth Potillo

I would have to check, but that was done several years ago and I think we actually reflected it as a dividend of our GAAP statements. It's a 99-year lease for a nominal rate, but I have -- I would have to double check.

Unknown Shareholder

Okay. And -- that would be really nice to find out about that? How would I follow up with that?

Beth Potillo

You can follow up with me. It's Beth.

Operator

Thank you for the questions, ladies and gentlemen. I would now like to turn the call back over to Michael Carter for closing remarks.

C. Michael Carter

I would like to thank all of you for joining us on this call and look forward to our next one. Have a good day.

Operator

Thank you for joining today's conference, that does conclude the presentation. You may now disconnect. Good day.

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Source: Dole Food Management Discusses Q1 2013 Results - Earnings Call Transcript
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