Do l e Fo o d C o m p a n y, In c .
         1997 Annual Report
Dole Food Company’s                  worldwide

team of growers, packers, processors, shippers and

employees is committed...
Dole Financial Highlights

(in millions, except per share data)                                                           ...
To O u r S h a r e h o l d e r s



    1997 was an excellent year for the Dole Food Company.
        Revenues grew to $4....
(Seated - Right to Left):
                                                                                                ...
As the largest grower, shipper and
N                                 F            S
    UTRITION            AND           ...
D o l e Wo r l d w i d e O p e r a t i o n s



                                                                          ...
Dole
                                                     North America


                        Dole’s North American op...

consumer research, in early 1998 Dole will introduce a new, iceberg-based salad, “Greener Selection,”
which incorporates r...
Dole
                                                      Latin America


                          1997 marked a record ...
Dole has also acquired additional grape farms in Northern Chile and entered into several long term
land rental agreements ...
Dole
                                                                     Asia


                        Sales in Asia inc...
The tremendous demand for the Dole brand in Japan resulted in
D   ISTRIBUTION

the opening of a second distribution center...
Dole
                                                                  Europe


                          During 1997, Dol...
positioned to be the premier supplier of fresh fruit and vegetable products in this marketplace.
The benefits in 1997 of c...
D o l e F o o d P r o d u c t s Wo r l d w i d e
     DOLE FRESH FRUIT                      Dole Classic Romaine Salad    ...
(Seated - Right to Left):
David H. Murdock, Peter
M. Nolan, Andrew Biles
and Juergen Schumacher

(Standing - Right to Left...
Dole Financial Highlights

                                                                                               ...
Consolidated Statements of Income

(in thousands, except per share data)                            1997           1996   ...
Consolidated Balance Sheets

       (in thousands)                                                   1997            1996
...
Consolidated Statements of Cash Flow

(in thousands)                                                                      ...
Notes to Consolidated Financial Statements

                                                                        are st...
Dole 1997 annual
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Transcript of "Dole 1997 annual"

  1. 1. Do l e Fo o d C o m p a n y, In c . 1997 Annual Report
  2. 2. Dole Food Company’s worldwide team of growers, packers, processors, shippers and employees is committed to consistently providing safe, high quality fruit, vegetables and food products while protecting the environment in which its products are grown and processed. Dole’s dedication to quality is a commitment solidly backed by: scientific pest management programs, stringent quality control measures, state-of-the-art production and transportation technologies, continuous improvement through research and innovation, and dedication to the safety of our employees, communities and the environment.
  3. 3. Dole Financial Highlights (in millions, except per share data) 1997 1996 1995 1994 1993 Revenue $4,336 $3,840 $3,804 $3,499 $3,108 Income from continuing operations $ 160 $ 89 $ 120 $ 58 $ 62 Income from discontinued operations – – (97) 10 16 Net income $ 160 $ 89 $ 23 $ 68 $ 78 Diluted earnings per common share Continuing operations $ 2.65 $ 1.47 $ 2.00 $ 0.98 $ 1.04 Discontinued operations – – (1.61) 0.16 0.26 Net Income $ 2.65 $ 1.47 $ 0.39 $ 1.14 $ 1.30 Diluted average common shares outstanding 60 60 60 60 60 Total Assets $2,464 $2,487 $2,442 $3,685 $3,159 Capitalization Short-term debt $ 14 $ 22 $ 24 $ 54 $ 79 Long-term debt 755 904 896 1,555 1,111 Minority interests 38 30 26 25 39 Common shareholders’ equity 666 550 508 1,081 1,052 Total $1,473 $1,506 $1,454 $2,715 $2,281 Book value per common share $11.10 $ 9.18 $ 8.49 $18.17 $17.70 $ 45 3⁄4 $ 26 3⁄4 Common stock price at year-end $ 341⁄2 $ 351⁄2 $ 231⁄2 Market price range High $ 49 5⁄8 $ 431⁄2 $ 381⁄2 $ 351⁄2 $ 37 7⁄8 Low $ 33 3⁄8 $ 32 7⁄8 $ 241⁄2 $ 221⁄2 $ 25 7⁄8 Annual cash dividends per common share $ 0.40 $ 0.40 $ 0.40 $ 0.40 $ 0.40 Note: Income from continuing operations for 1996 and 1993 includes pre-tax restructuring charges of $50 million and $43 million, respectively. Income from continuing operations for 1995 includes a pre-tax gain of $62 million on assets sold or held for disposal. The real estate and resorts business distributed to shareholders in 1995 has been presented throughout this report as a discontinued operation. Growth Cash Flow Return Va l u e $45.75 26.3 % 4,336 372 24.6 % 3,840 3,804 338 3,499 $35.00 308 $34.00 3,108 273 265 16.0 % $26.75 $23.00 7.6 % 6.4 % 93 94 95 96 97 93 94 95 96 97 93 94 95 96 97 93 94 95 96 97 Revenue E BI TD A* Re tu r n o n Eq u i t y * * Sto c k Pr ice (in millions) (in millions) (in percent) (year-end) s Depreciation & Amortization s EBIT *NOTE: Before restructuring charges and 1995 net gain on asset dispositions **NOTE: Before 1996 restructuring charge and 1995 asset impairment 
  4. 4. To O u r S h a r e h o l d e r s 1997 was an excellent year for the Dole Food Company. Revenues grew to $4.3 billion, an increase of 13% over prior year. s Cash flow from operations (EBITDA) grew to $372 million, an increase of 10% over prior year. s Net income after taxes grew to $160.2 million ($2.65 per share), an increase of 23% over prior s year, excluding the extraordinary charge taken in 1996. Net debt was reduced by $154 million, from $891 million to $737 million. s Shareholder equity increased by $116 million, from $550 million to $666 million, and improved s debt to equity ratio from 62% to 53%. These achievements were the result of the combined contribution of all of our business units which are focused on earning higher returns on investments. 1997 was a year of solid growth for our core business units. Dole’s array of G ROWTH wholesome, fresh, nourishing products continues to benefit from the worldwide trend toward a healthier lifestyle. This trend, combined with Dole’s quality and service achieved by its unique global production and distribution infrastructure, will allow Dole to grow at this accelerated pace well into the future. Dole’s volume growth came from all areas of our business: Increasing demand for fresh fruit and vegetables in the developed markets of the United States, s Europe and Japan. Growing demand for fresh fruits and vegetables in the developing economies in Latin America, s Eastern Europe, Russia and the former Soviet Republics, and China. Increasing demand for Dole’s convenient, ready-to-eat prepared salad mixes, both domestically and s internationally. New product line extensions in both the fresh salad, fresh cut fruit, and the packaged food areas. s Growth and expansion of Dole’s unique distribution network throughout Europe and Japan. s Continued expansion of Dole’s global sourcing network, including growth at its Spanish citrus and veg- s etable subsidiary, Pascual Hermanos, and growth from joint venture relationships in Africa with tropical fruits from Cameroon and Ivory Coast, and citrus and deciduous fruits from South Africa. While Dole’s volume growth was fueled by all of the above factors, its revenue growth was impacted in 1997 due to adverse foreign currency movements, which were compounded in the marketplace by the Asian financial crisis. It was gratifying to see that the strong demand for Dole products offset adverse market conditions. 
  5. 5. (Seated - Right to Left): David H. Murdock, David A. DeLorenzo, Mike Curb and Elaine L. Chao (Standing - Right to Left): Richard M. Ferry, Zoltan Merszei and James F. Gary Our foremost interest is in expanding cash flow through C V REATING ALUE company ownership of depreciable assets. It is our belief that the primary value to stockholders is considerable cash flow in excess of earnings. As the Dole brand continues to grow and become more visible around the globe, management has also focused on downsizing or liquidating businesses or assets that have not provided adequate return. In 1997 Dole successfully liquidated its dried fruit business in the United States, as well as continued its orderly sale of certain agricultural lands in North America. The cash flow from these liquidations has been used to pay down debt. As a result of the significant debt reduction in 1997, Dole’s current debt consists almost entirely of its long term bonds. Based on the strong cash flow generated during the year, Dole also reduced its available five year revolving credit facility from $600 million to $400 million. Agents in the facility are Chase Manhattan Bank, Bank of America and Citibank. In January 1998, Dole announced plans to move to a new headquarters facility in Westlake Village, California. Construction of the complex is anticipated to begin in 1998 and Dole plans to occupy these facilities during 1999. 
  6. 6. As the largest grower, shipper and N F S UTRITION AND OOD AFETY marketer of fresh fruits and vegetables in the world, Dole remains committed to nutrition education, and to providing leadership in the area of food safety. Dole’s nutrition department, in combination with nutrition experts at the Mayo Clinic and the University of California, Los Angeles, are in the process of compiling a nutrition encyclopedia for pub- lication within the year. The encyclopedia will focus on the value of eating fresh fruits, vegetables, nuts and protein products. This undertaking will enhance the quality of life for the benefit of all people around the globe. Dole’s nutrition education CD-ROM for children continues to provide elementary school teachers with the tools needed to teach proper nutrition to children and is now in use in more than 35,000 schools. Our popular 5 A Day web site also provides educational materials for people of all ages and all nations, and has gained widespread popularity. O In 1985, when I became chairman of Dole Food Company, it was predomi- UTLOOK nately a banana and pineapple company, with major real estate holdings. Over the years, Dole has evolved into a highly focused internationally diversified food processing company with operations in more than 90 countries. Dole is a financially sound company with excellent prospects for further growth. Dole is positioning its expertise and technology in the industry to take advantage of developing opportunities in Asia, which could conceivably be the emerging continent in the next century. We continue to expand our distribution system, which will assure growth and market penetration of Dole’s quality brand of pack- aged and fresh fruit and vegetable products throughout Asia and Europe. Dole has a clear and strategic vision, an efficient cost base, a dynamic brand and a first rate team of employees. It is this dedicated group of women and men who embody the intellect, integrity, creative imagination and skills that enable Dole to be a leader in the industry. We wish to express our appreciation and gratitude to our employees, shareholders and customers for their continued support and confidence. Sincerely, David H. Murdock Chairman and Chief Executive Officer
  7. 7. D o l e Wo r l d w i d e O p e r a t i o n s q q q q q q q q q qq q v qv vq q v qq q q qq q q q qq q s s vvqq q q qq s q sv v s qv q s v s q q sq v q 5 s s qq qq q qq q q s s q q q s q q q q qq q q q s qs qs q q sq sq s q sq q qq q ss qs s sq s sq s ss q q s s q q q s q s q s s s q q s s q q q Sourcing s v Ripening/Distribution q Markets 5 Corporate FOOD OPERATING DIVISIONS AND LOCATIONS FOOD MARKETING DIVISIONS AND LOCATIONS EUROPE AND AFRICA Colombia EUROPE AND Windward Islands Malta Belgium MIDDLE EAST Costa Rica Morocco ASIA Cameroon Albania Dominican Republic Netherlands Australia Canary Islands Algeria Ecuador Norway China France Austria Guadeloupe Oman Japan Germany Azerbaijan Guatemala Poland New Zealand Ghana Bahrian Honduras Portugal Philippines Greece Belarussia Jamaica Qatar Thailand Italy Belgium Martinique Romania NORTH AMERICA Ivory Coast Bosnia Mexico Russia Canada Netherlands Bulgaria Netherlands-Antilles Saudia Arabia United States South Africa Croatia Panama Senegal Arizona Spain Czech Republic Peru Slovakia California Tunisia Denmark Trinidad & Tobago Somalia Florida Turkey Estonia Uruguay Spain Hawaii United Kingdom Egypt Venezuela Sweden Ohio Finland Switzerland LATIN AMERICA AND ASIA Washington France Syria CARIBBEAN Australia Georgia Taijikistan Argentina China Germany Tunisia Chile Hong Kong Greece Turkey Colombia Indonesia Hungary Ukraine Costa Rica Japan Iceland United Arab Emirates Ecuador Malaysia India United Kingdom Guadeloupe New Zealand Ireland Uzbekistan Guatemala Philippines Israel LATIN AMERICA AND Honduras Singapore Italy CARIBBEAN Jamaica South Korea Jordan Argentina Martinique Taiwan Kazakhstan Bahamas Mexico Thailand Kuwait Barbados Nicaragua NORTH AMERICA Latvia Bermuda Panama Canada Lebanon Brazil Peru United States Lithuania Chile Venezuela Luxembourg 
  8. 8. Dole North America Dole’s North American operation achieved its highest revenue in company history in 1997 by growing approximately 13 percent versus 1996. In North America, Dole has the broadest product mix of any region in the world. Dole continues to be the leading supplier of fresh produce and related products to the region. With efforts to maintain the highest quality and to promote the benefits of healthy eating, Dole is well positioned to continue market growth within North America. Growth, both in earnings and market share, was the key to success for Dole P ACKAGED packaged foods in 1997. Record sales and earnings growth were fueled by new product introductions, Innovative field harvesting delivers roll out of existing products to new geographic areas, and volume increases in base businesses. Dole’s fresh packed produce direct to the market. share of the canned pineapple business grew to 44.4 percent, the only major brand to show volume gains. Cost reductions in the distribution and marketing areas contributed significantly to earnings. As the number of meals eaten away from home increases, the foodservice area becomes increasingly important. Pineapple as a pizza topping continues to gain in popularity. Dole pizza-cut tidbits distribution has been expanded nationally. Dole “Easy Open” pineapple chunks and tropical fruit salad have provided vending machine operators with convenient and healthy snack alter- natives. New packaging forms, such as pouches, have been developed for pineapple in response to restaurant operators’ requests for convenience. The fresh cut salad category continues to exhibit double F V RESH EGETABLES digit growth, with a 17 percent dollar increase in 1997, growing to nearly $1.6 billion in sales. Dole’s growth outpaced the category, and Dole salads are now a familiar item in nearly 60 percent of supermarkets. Iceberg salad continues to be the largest segment within fresh cut salads. Fifty percent of American households buy iceberg salads, more than any other salad segment. Following extensive 
  9. 9.
  10. 10. consumer research, in early 1998 Dole will introduce a new, iceberg-based salad, “Greener Selection,” which incorporates romaine and iceberg lettuce, carrots and cabbage. Dole has built a new E D N XPANDED ISTRIBUTION ETWORK $30 million, 150,000 square foot fresh vegetable manufacturing and distribution facility in Springfield, Ohio. Situated on 40 acres, the facility will be operational during the first quarter of 1998. The plant will incorporate the same advanced technology that won Dole’s Soledad, California facility Food Engineering’s “Plant of the Year” award. This facility dramatically expands and improves Dole’s ability to service retail customers. A sophisticated logistics system will connect the Springfield plant with four local delivery points: Chicago, Atlanta, Wilkes-Barre and New York. This will provide customers in the Midwestern and Eastern United States more frequent deliveries and service within 24 hours. © A third facility in Yuma, Arizona completes Dole’s value added facilities. In the five years since the pre-cut salad category exploded in the marketplace, Dole has built more than 600,000 Product Diversification Consumers select from square feet of manufacturing space to take advantage of this demand. over 170 products with the Dole brand from nearly every aisle of Dole continues to be the market leader of imported fresh tropical fruit. Products F RUIT the supermarket. include bananas, pineapples, mangoes, papayas and melons. Annual sales for these products increased more than 10 percent during 1997. Dole is the only fully refrigerated, containerized fresh produce importer in North America, which enables it to maintain the highest quality standards in delivering product to the marketplace. In 1997, a record quality navel orange crop allowed Dole’s sales group to increase market penetration and to solidify its position as the second highest market share in the navel orange industry. High quality crops and Dole’s brand strength in the marketplace resulted in one of the highest returns in the industry for lemons. Dole is the leading importer of fresh fruit from Chile, generating sales of approximately $200 million. Dole’s high quality winter season table grapes, kiwi, deciduous and stone fruit sourced from Chile contributed to increased market penetration in these product categories in 1997. Momentum from early season sales of Chilean sourced products carried through the year, allowing a record volume of California sourced table grapes to be marketed. Dole continues to be the continent’s leading supplier of grapes. 
  11. 11. Dole Latin America 1997 marked a record year for Dole production, despite severe flooding throughout Central America at the end of 1996 and in the Spring of 1997. Dole Latin America experienced a 12 percent increase in export volume over 1996. Dole supplements its own production with a selective network of 1,300 independent growers. Over 21,000 employees on the Dole Latin America team provide the highest quality, safest fresh produce possible. © Dole is reducing its overall cost structure in its shipping program. Due to continued strong brand growth in North America and Europe, Dole has ordered two refrigerated container vessels from The world’s largest dedicated refrigerated HDW in Kiel, Germany, which will reduce Dole’s reliance on costly short-term charters while containerized ship- ping fleet distributes expanding company-owned and managed shipping capacity in late 1999. to global markets. Dole constantly strives to incorporate the latest technology in its operations to improve quality. The company converted nine vessels in its Northern European service to carry fruit under controlled atmosphere conditions, which extends product shelf life and ensures that fruit arrives to the consumer in peak condition year-round. In addition, Dole has expanded its fleet of refrigerated containers by ten percent and undertaken a long term container modernization program. Dole Latin America will continue to focus on profitable growth of its core products and markets as well as opportunities to build earnings and expand the Dole brand name throughout Latin and South America. The strategy is to integrate forward and open distribution centers from which Dole products will be delivered directly to retailers. Dole is the largest exporter of deciduous fruits in Chile. Expansion through joint ventures further enables Dole to distribute products directly to retail supermarkets in the Santiago area. 
  12. 12. Dole has also acquired additional grape farms in Northern Chile and entered into several long term land rental agreements for production of deciduous fruit. A significant portion of Dole production is purchased from independent growers. Dole assists over 640 farmers to successfully grow and pack quality bananas. A team of highly skilled agronomists and technical staff educate growers to ensure Dole’s recommended agricultural practices, quality guidelines, and environmental procedures and standards are implemented. © In 1997, Dole completed the installation of the most technically advanced sorting and sizing equipment at its apple packing plant in Chile. In order to continue to lead the industry in Nutritious food for a healthy active productivity and quality, Dole has invested in state-of-the-art technology which has been applied to its lifestyle enjoyed by families worldwide. pre-sizer equipment. Dole now has the most modern packing facility in Central and South America. Dole’s majority-owned H B O ONDURAN EVERAGE PERATION beverage operation continues as the dominant beverage supplier in Honduras. The operation leads the Honduran market commanding market shares of approximately 75 percent in soft drinks and 99 percent in beer. The operation exclusively represents Coca-Cola® and Canada Dry® products as well as controlling its own brand of fruit-flavored soft drinks. The division produces and/or distributes four leading domestic brands of beer, along with the internationally recognized brands of Holsten® and Budweiser® Vertical operations include a sugar mill, a plastic case and bottle business, and bottle . cap manufacturing. It also operates an edible oil and soap operation with well-established local brands. The division has initiated an upgrade of its production facilities, starting with the recent purchase of one of the most modern soft drink bottling lines in Latin America. These and other plant upgrades are being made to fulfill projected growth in product demand. Sales and service levels have improved B D EVERAGE ISTRIBUTION significantly due to efforts made in 1997 to expand direct control over product distribution in Honduras’ rural regions. New routes are continuously being added in both rural and urban areas to deliver beverages to more customers. The operation has also initiated the modernization of its sales information system by implementing a hand-held computer-based order retrieval system. 
  13. 13. Dole Asia Sales in Asia increased to approximately $1.04 billion, a 6.6 percent improvement from 1996. Despite the economic crisis in Asia, Dole quickly adapted to the changes in the economy. Sales in Japan, Dole’s flagship market, increased 16 percent in local currency due to increased marketing efforts and the strength of the Dole brand, which is recognized by 92 percent of the consumers. © Production facilities in the Philippines and Thailand experienced an P RODUCTION excellent year of quality and production. Dole Philippines, located in the southern most island of Dole canneries shipped over 721,000 Mindanao, celebrated its 35th year of operation and produced more than 490,000 tons of fresh and tons of fresh and packaged pineapple processed pineapple in 1997. Its sister operation in Thailand celebrated a milestone 25th anniversary in 1997. at its facilities in Hua Hin located on the Gulf of Thailand. When combined with Dole’s second cannery in Champorn, located 400 miles south of Bangkok, these plants comprise the largest produc- tion operations in Thailand, producing 231,000 tons of pineapple in 1997. More than 95 percent of the Dole pineapple produced in Thailand is sourced from independent growers, reducing overall cost structure. The devaluation of the currencies in the Philippines and Thailand contributed favorably to reducing cost in these two divisions. Targeted capi- tal spending programs aimed at introducing new technology to enhance plants and equipment also served to increase efficiency, strengthen quality and reduce costs. Dole’s new line of fruits packed in clear plastic cups is enjoying a successful intro- duction in Europe and Asia. Utilizing new packaging technology, these convenient cups provide an excellent alternative to conventional canned packaging and provide added convenience for consumers on the go. Manufactured in Dole’s Philippine and Thailand operations, new fruit varieties have been added to the product line. Testing in selected markets in North America is scheduled in 1998. 
  14. 14. The tremendous demand for the Dole brand in Japan resulted in D ISTRIBUTION the opening of a second distribution center in Tokyo and the expansion of the Dole center in Kobe. By year end, Dole had six distribution centers in Japan operating at or near capacity. This forward integration has allowed Dole greater efficiency and quality control of products distributed directly to Dole enjoys a 92% brand recognition by the supermarket shelf. Dole is by far the largest importer of fresh fruits and vegetables and in 1997 Japanese consumers. expanded its product offerings by marketing more domestically grown product. © To provide the Japanese consumers with convenient meal solutions, Dole established fresh-cut fruit and vegetable centers in Japan. These centers enhance product line offerings, which help meet requirements of the retail and foodservice market segments, and expand consumer aware- ness of the Dole brand. The new distribution and fresh-cut centers are allowing Dole to expand category management efforts in the retail market. With an efficient distribution network, a wide array of both domestic and imported fruits and vegetables, and a growing line of pre-cut fruits, vegetables and salads, Dole is uniquely positioned to supply the increasing needs of Japan’s supermarkets. Sapporo Expanded distribution systems throughout the world, materially enhance the recognition of qsv Dole’s unique emblem. Dole’s goal is to have the industry’s finest distribution system deliver the highest quality product at the most efficient cost structure. Recent deregulation in Japan allowed Dole to introduce the concept of con- tract growing and create evolutionary change in the country’s traditional agribusiness sv structure. Dole is now sourcing domestically grown products from a newly Niigata 5 established network of over 1,200 Japanese farmers. Contracted in 5 Sendai 1997, growers are producing broccoli, tomatoes, cabbage, radishes, carrots, lettuce, cherry tomatoes sv sv sv Fukuoka qsv sv and melons for distribution in Dole centers sv qsv qsv throughout the country. qsv Tokyo sv Nagoya Kobe q Dole Center sv s Fruit Packing Plant v Future Vegetable Packing Plant 5 Future Dole Center, Fruit and Vegetable Packing Plant 
  15. 15. Dole Europe During 1997, Dole Europe increased sales by 13 percent to $1.2 billion and continued to invest in the expansion of its European distribution network. This closely links Dole’s extensive worldwide production and sourcing network to retail distribution, distinguish- ing Dole as the largest and broadest producer and distributor of fresh fruits and vegeta- bles in Europe. The Dole brand increasingly signifies a dedication to consistently pro- viding retail customers with high quality products on a timely basis, as well as product innovation and an assurance of agricultural and distribution practices that meet the highest criteria of food safety and environmental protection. Dole added to its European distribution network by acquiring distribution centers from its French joint venture partner, Compagnie Fruitiere. These centers, eight in France, four in Spain and one in Packing, shipping and distribution are the United Kingdom, were merged with Dole’s existing distribution network, providing unsurpassed the keys to delivering the Dole brand breadth of distribution to retailers in these countries. throughout the world. Dole increased its participation in the Compagnie Fruitiere joint venture. The joint venture focused on the development of banana and pineapple production in West Africa and French Antilles. During 1997, the joint venture acquired the largest banana and pineapple producer and exporter in the Ivory Coast, SCB, providing additional volume to Dole’s distribution to European retailers. The combination of unequaled distribution coverage and premium African sourcing has cre- ated a unique market position for Dole and further reduces the cost base on Dole’s shipping service to the European Union markets in France, Italy, North Europe and the United Kingdom. In the Italian market, Dole continued to capitalize on investments in both ripening and distribution. As the supermarket channel continues to grow in importance in Italy, Dole is ideally 
  16. 16. positioned to be the premier supplier of fresh fruit and vegetable products in this marketplace. The benefits in 1997 of controlling distribution and production were a large part of Dole’s financial success in Europe. Dole continues to develop its Spanish production base for European produced fruits and vegetables. Dole views European production as essential to developing long-term relationships with retailers. European retailers stock over 50 percent of their produce departments with domestically grown produce year-round. Through its continued growth and integration of Pascual Hermanos, Dole is working to achieve a full complement of European produce to offer retailers through Dole’s distribution network. In its new Pascual Hermanos subsidiary, Dole acquired 326 acres of climatic controlled growing facilities, sixty-five percent of which are being improved to make Dole the industry’s best and Dole’s convenient ready-to-eat salads most resourceful supplier of fruits and vegetables in Spain. are gaining recogni- tion in Europe. During 1997, Dole introduced Pascual Hermanos to field packing of iceberg lettuce. Automated field harvest and packing machines, developed in conjunction with Dole fresh vegetables in Salinas, California, bring the packing lines to the field. This produces savings in time, handling, transport and labor, and most importantly, provides a substantially higher quality produce to cus- tomers. This is a superb example of leveraging Dole’s worldwide capabilities. Dole secured a substantial cost advantage in 1997 while continuing to penetrate new markets by consolidating its Black Sea shipping service. This operation serves Romania, Bulgaria, Ukraine and Russia. A new market, Georgia, was added during 1997, as well as a trucking service from Dole’s Istanbul distribution facility that reaches the new markets of Kazakhstan, Uzbekistan and Taijikistan. Dole recognizes its responsibility to promote sustainable agriculture and protect the environment and employees. Dole is aggressively implementing ISO 14000, the international environmental standard. Dole believes a key success factor in the European marketplace is an unquestioned commitment to environmental responsibility and employee welfare. Dole intends to lead the industry in both. 
  17. 17. D o l e F o o d P r o d u c t s Wo r l d w i d e DOLE FRESH FRUIT Dole Classic Romaine Salad DOLE PACKAGED FOODS Dole Apples Dole Shredded Lettuce Dole Apricots in Juice or Syrup Dole Apricots Dole Shredded Red Cabbage Dole Apricot Halves Dole Bananas Dole Classic Iceberg Salad Dole Apricot Snack Cup Dole Blueberries Dole Greener SelectionTM Salad Dole Aloe Vera (Solid) Dole Cantaloupe Dole American Special Blend Salad Dole Cherry Flavored Mixed Fruit Dole Cherries Dole European Special Blend Salad Dole Diced Peaches Dole Clementines Dole French Special Blend Salad Dole Fruit Bowls – Diced Peaches Dole Coconuts Dole Italian Special Blend Salad Dole Fruit Bowls – Mixed Fruit Dole Cranberries Dole Romaine Special Blend Salad Dole Fruit Bowls – Tropical Fruit Dole Grapefruit Dole Spring Mix Special Blend Salad Dole Fruit Bowls – Pineapple Tidbits Dole Grapes Dole Mediterranean Special Blend Salad Dole Fruit Cocktail Dole Honeydew Melon Dole Verona Special Blend Salad Dole Fruit Mix, Easy Open Dole Kiddie Pack (bananas) Dole Tuscany Special Blend Salad Dole Fruit Festival Snack Cup Dole Kiwi Dole Complete Caesar Salad Dole Guava Halves Dole Lemons Dole Complete Spinach Bacon Salad Dole Ketchup (Regular and Hot Spice) Dole Lychees Dole Complete Oriental Salad Dole Orange Fruit Jelly Cups Dole Mangos Dole Complete Sunflower Ranch Salad Dole Peach Halves Dole Morado Banana Dole Complete Romano Salad Dole Peach Snack Cup Dole Native Banana Dole Complete Caesar Salad with Fat Free Dressing Dole Pear Snack Cup Dole Nectarines Dole Complete Herb Ranch Salad with Fat Free Dole Pineapple Cubes in Syrup Dole Oranges Dressing Dole Pineapple Concentrate Dole Papayas Dole Complete Raspberry Romaine Salad with Fat Free Dole Pineapple Fun Shapes – Cosmic Dole Peaches Dressing Dole Pineapple Fun Shapes – Sea Creatures Dole Pears Dole Complete Zesty Italian Salad with Fat Free Dole Pineapple Tidbits for Pizza Dole Persimmons Dressing Dole Pineapple Slices in Juice or Syrup Dole Pineapple Dole Caesar Lunch For OneTM Dole Pineapple Chunks in Juice or Syrup Dole Fresh-Cut Pineapple Dole Classic Ranch Lunch For OneTM Dole Pineapple Snack Cup Dole Plantains Dole Caesar with Fat Free Dressing Lunch For OneTM Dole Pineapple Snack Wedges, Easy Open Dole Plums Dole Italian with Fat Free Dressing Lunch For OneTM Dole Pineapple Tidbits in Juice or Syrup Dole Pomegranates Dole Crushed Pineapple in Juice or Syrup Dole Raspberries DOLE DRIED FRUIT & NUTS Dole Pineapple & Peach Cups Dole Satsumas Dole Blanched Slivered Almonds in Reclosable Bags Dole Pineapple & Papaya Fruit Jelly Cups Dole Strawberries Dole Blanched Whole Almonds in Reclosable Bags Dole Tropical Fruit Juice Box Dole Super Sweet Pine Dole Chopped Natural Almonds in Reclosable Bags Dole Pineapple Juice Dole Sweet Banana Dole Sliced Natural Almonds in Reclosable Bags Dole Pineapple Orange Juice Dole Tangelos Dole Whole Natural Almonds in Reclosable Bags Dole Pine–Orange Banana Juice Dole Tangerines Dole Golden Seedless Raisins Dole Pine–Orange Guava Juice Dole Yucca Dole Seedless Raisins Canister Dole Pine–Passion Banana Juice Dole Seedless Raisins Carton Dole Pineapple Orange Juice Box DOLE FRESH VEGETABLES Dole Seedless Raisins Mini Snacks Dole Pineapple Orange Banana Juice Box Dole Artichokes Dole Seedless Raisins Six Packs Dole Pineapple Orange Raspberry Juice Box Dole Asparagus Dole Seedless Raisins in Reclosable Bags Dole Pineapple Juice Drink Dole Bell Peppers Dole Chopped Dates Carton Dole Pineapple Grapefruit Juice Dole Broccoli Dole Pitted Dates Carton Dole Pineapple Pink Grapefruit Drink Dole Brussels Sprouts Dole Pitted Prunes Canister Dole Pineapple Lychee Juice Drink Dole Carrots Dole Pitted Prunes Carton Dole Pineapple Orange Juice Drink Dole Cauliflower Dole Pitted Prunes in Reclosable Bags Dole Pineapple Strawberry Juice Drink Dole Celery Dole Mandarin Orange Segments Dole Green Leaf Lettuce SAMAN Dole Mandarin Orange Segments, Easy Open Dole Iceberg Lettuce Guyennoise Prunor Pitted Prunes Dole Mandarin Orange Fruit Cups Dole Butter Lettuce Guyennoise Prunor Whole Prunes Dole Mushroom Dole Red Leaf Lettuce JA Whole Dates Dole Papaya in Syrup Dole Romaine Lettuce JA Whole Prunes Dole Yellow Papaya Chunks Dole Green Onions Whole Deglet Nour Dates Dole Red Papaya Chunks in Light Syrup Dole Sugar Peas Soelia Dried Apricots Dole Pears in Juice and Syrup Dole Idaho Potatoes Soelia Dried Figs Dole Peaches in Juice and Syrup Dole Radishes Soelia Blanched Whole Almonds Dole Deciduous Fruit Cocktail in Juice and Syrup Soelia Sliced Thin Almonds Dole Sliced Peaches, Easy Open DOLE FRESH-CUT VEGETABLES Soelia Whole Peanuts Dole Tropical Fruit Salad in Juice or Syrup Dole Peeled-Mini Carrots Soelia Pistachios Dole Tropical Fruit Salad, Easy Open Dole Shredded Carrots Soelia Pitted Prunes Dole White Asparagus Dole Cole Slaw Soelia Whole Prunes Seasons Tropical Fruit Mix Dole Chopped Romaine Salad 
  18. 18. (Seated - Right to Left): David H. Murdock, Peter M. Nolan, Andrew Biles and Juergen Schumacher (Standing - Right to Left): Lawrence A. Kern, William F. Feeney, Paul Cuyegkeng and David A DeLorenzo (Not pictured: Gregory L. Costley and Roberto Zacarias) Officers: (Seated - Right to Left): Thomas J. Pernice, David H. Murdock, James A. Dykstra, Roberta Wieman and David A. DeLorenzo (Standing - Right to Left): Edward A. Lang III, David A. Cohen, John W. Tate, George R. Horne, David W. Perrigo and J. Brett Tibbitts (Not Pictured: Patrick A. Nielson) 
  19. 19. Dole Financial Highlights Growth 577% $981 $873 75% 235% $588 $149 95% North Latin Asia Europe America America Re ve n u e Grow t h by Re g i o n 1987 to 1997 (in millions) Cash Flow 372 212 338 308 174 273 265 129 110 90 93 94 95 96 97 93 94 95 96 97 E BIT D A* C ap i tal Exp e n d i tu re s (in millions) (in millions) s Depreciation & Amortization s EBIT Capitalization 62.5 % 61.9 % 1,081 1,563 1,052 59.1 % 52.5 % 52.3 % 1,155 666 891 847 550 737 508 93 94 95 96 97 93 94 95 96 97 93 94 95 96 97 C ommon Sha rehol d ers’ Ne t De b t Ne t De b t to Eq uit y Ne t De b t an d Equi ty R a tio (in millions) (in millions) (in percent) *NOTE: Before restructuring charges and 1995 net gain on asset dispositions 
  20. 20. Consolidated Statements of Income (in thousands, except per share data) 1997 1996 1995 Revenue $4,336,120 $3,840,303 $3,803,846 Cost of products sold 3,692,277 3,256,345 3,217,869 Gross margin 643,843 583,958 585,977 Selling, marketing and administrative expenses 399,800 369,675 392,694 Restructuring charge – 50,000 – Operating income 244,043 164,283 193,283 Interest income 7,776 8,412 7,501 Net gain on assets sold or held for disposal – – 61,655 Other income (expense) – net 8,034 4,535 (5,429) Earnings before interest and taxes 259,853 177,230 257,010 Interest expense (64,589) (68,699) (81,186) Income from continuing operations before income taxes 195,264 108,531 175,824 Income taxes (35,100) (19,500) (56,000) Income from continuing operations 160,164 89,031 119,824 Loss from discontinued operations, net of income taxes – – (96,493) Net income $ 160,164 $ 89,031 $ 23,331 Earnings per common share Basic – continuing operations $ 2.67 $ 1.48 $ 2.01 Diluted – continuing operations 2.65 1.47 2.00 Basic – net income (after discontinued operations) $ 0.39 Diluted – net income (after discontinued operations) 0.39 See Notes to Consolidated Financial Statements  DOLE FOOD COMPANY, INC.
  21. 21. Consolidated Balance Sheets (in thousands) 1997 1996 Current assets Cash and short-term investments $ 31,202 $ 34,342 Receivables – net 534,844 518,266 Inventories 468,692 526,052 Prepaid expenses 48,438 47,164 Total current assets 1,083,176 1,125,824 Investments 69,248 72,930 Property, plant and equipment – net 1,024,247 1,024,135 Long-term receivables – net 63,482 69,861 Other assets 223,742 194,057 Total assets $2,463,895 $2,486,807 Current liabilities Notes payable $ 11,290 $ 20,478 Current portion of long-term debt 2,326 1,497 Accounts payable 230,143 185,747 Accrued liabilities 432,680 454,208 Total current liabilities 676,439 661,930 Long-term debt 754,849 903,807 Deferred income taxes and other long-term liabilities 328,293 341,798 Minority interests 37,842 29,712 Commitments and contingencies Common shareholders’ equity 666,472 549,560 Total liabilities and equity $2,463,895 $2,486,807 See Notes to Consolidated Financial Statements  DOLE FOOD COMPANY, INC.
  22. 22. Consolidated Statements of Cash Flow (in thousands) 1997 1996 1995 Operating activities Income from continuing operations $ 160,164 $ 89,031 $ 119,824 Adjustments to continuing operations Depreciation and amortization 112,081 111,073 113,325 Equity earnings net of distributions 373 (2,875) (6,533) Net gain on assets sold or held for disposal – – (61,655) Provision for deferred income taxes 11,575 (1,741) 30,429 Restructuring charge – 50,000 – Other (23,005) (8,203) 41 Change in operating assets and liabilities, net of effects from acquisitions Receivables – net (10,438) (89,176) 53,142 Inventories 72,066 27,222 (57,588) Prepaid expenses and other assets (1,167) (8,846) (18,800) Accounts payable and accrued liabilities (7,487) (34,270) 30,842 Other (23,126) (37,262) 31,592 Cash flow provided by operating activities of continuing operations 291,036 94,953 234,619 Cash flow used in operating activities of discontinued operations – – (11,467) Cash flow provided by operating activities 291,036 94,953 223,152 Investing activities Proceeds from sales of businesses and assets 39,200 58,417 432,746 Capital additions (129,171) (109,686) (90,276) Purchases of investments and acquisitions, net of cash acquired (40,010) (58,775) (35,251) Other (500) 438 998 Cash flow provided by (used in) investing activities of continuing operations (130,481) (109,606) 308,217 Cash flow used in investing activities of discontinued operations – – (15,144) Cash flow provided by (used in) investing activities (130,481) (109,606) 293,073 Financing activities Short-term borrowings 28,414 19,694 29,348 Repayments of short-term debt (40,887) (20,449) (62,944) Long-term borrowings 35,232 168,060 12,384 Repayments of long-term debt (169,110) (163,799) (675,098) Proceeds from distribution of real estate and resorts business – – 235,186 Cash dividends paid (23,988) (24,020) (23,861) Issuance of common stock 6,644 11,232 5,101 Repurchase of common stock – (13,874) – Cash flow used in financing activities of continuing operations (163,695) (23,156) (479,884) Cash flow used in financing activities of discontinued operations – – (9,352) Cash flow used in financing activities (163,695) (23,156) (489,236) Increase (decrease) in cash and short-term investments (3,140) (37,809) 26,989 Cash and short-term investments at beginning of year 34,342 72,151 45,162 Cash and short-term investments at end of year $ 31,202 $ 34,342 $ 72,151 See Notes to Consolidated Financial Statements  DOLE FOOD COMPANY, INC.
  23. 23. Notes to Consolidated Financial Statements are stated at cost and are amortized, principally on a Note 1 – Nature of Operations straight-line basis, over the estimated future periods to be Dole Food Company, Inc. and its consolidated benefited (not exceeding 40 years). The Company peri- subsidiaries (“the Company”) are engaged in the world- odically reviews the recoverability of these assets based on wide sourcing, processing, distributing and marketing analyses of undiscounted expected future cash flows. of high quality, branded food products including fresh Foreign Exchange – For subsidiaries in which the fruits and vegetables. Operations are conducted through- functional currency is the United States dollar, net out North America, Latin America, Europe (including foreign exchange transaction gains or losses are included eastern European countries), and Asia (primarily in in determining net income. These resulted in net losses Japan and the Philippines). The Company is also engaged of $5.0 million, $2.1 million, and $2.4 million for 1997, in beverage operations in Honduras. 1996 and 1995, respectively. Net foreign exchange gains The Company’s principal products are produced on or losses resulting from the translation of assets and both Company-owned and leased land and are also liabilities of foreign subsidiaries whose local currency is acquired through associated producer and independent the functional currency are accumulated as a separate grower arrangements. The Company’s products are component of common shareholders’ equity. primarily packed and processed by the Company and Income Taxes – Deferred income taxes are recognized are sold to retail and institutional customers and other for the tax consequences of temporary differences by food product companies. applying enacted statutory tax rates to the differences Note 2 – Summary of Accounting Policies between financial statement carrying amounts and the tax bases of assets and liabilities. The income taxes which Principles of Consolidation – The consolidated financial would be due upon the distribution of foreign subsidiary statements include the accounts of all significant majority- earnings have not been provided where the undistrib- owned subsidiaries. All significant intercompany accounts uted earnings are considered permanently invested. and transactions have been eliminated in consolidation. Earnings Per Common Share – In accordance with Annual Closing Date – The Company’s fiscal year ends Statement of Financial Accounting Standards No. 128, on the Saturday closest to December 31. Fiscal year basic earnings per common share are calculated using 1997 ended January 3, 1998 and included 53 weeks, the weighted average number of common shares out- while fiscal years 1996 and 1995 contained 52 weeks. standing during the period without consideration of Cash and Short-Term Investments – Cash and short-term the dilutive effect of stock options. The basic weighted investments include cash on hand and time deposits average number of common shares outstanding was with maturities of three months or less. 60.0 million, 60.0 million and 59.7 million for 1997, Inventories – Inventories are valued at the lower of cost 1996 and 1995, respectively. Diluted earnings per com- or market. Cost is determined principally on a first-in, mon share are calculated using the weighted average first-out basis. Specific identification and average cost number of common shares outstanding during the methods are also used for certain packing materials and period after consideration of the dilutive effect of stock operating supplies. options. The diluted weighted average number of com- Recurring Agricultural Costs – The costs of growing mon shares and equivalents outstanding was 60.4 mil- bananas and pineapples are charged to operations as lion, 60.4 million and 59.8 million for 1997, 1996 and incurred. Growing costs related to other crops are 1995, respectively. recognized when the crops are harvested and sold. Fair Value of Financial Instruments – The historical Investments – Investments in affiliates and joint ven- carrying amount is a reasonable estimate of fair value tures with ownership of 20% to 50% are generally for short-term financial instruments. Fair values for long- recorded on the equity method. Other investments are term financial instruments not readily marketable were generally accounted for using the cost method. estimated based upon discounted future cash flows at prevailing market interest rates. Based on these assump- Property, Plant and Equipment – Property, plant and tions, management believes the fair market values of the equipment are stated at cost, less accumulated depre- Company’s financial instruments, other than certain debt ciation. Depreciation is computed principally by the instruments (see Note 7), are not materially different straight-line method over the estimated useful lives from their recorded amounts as of January 3, 1998. of the assets. Stock Based Compensation – Statement of Financial Goodwill and Other Intangible Assets – Goodwill and Accounting Standards No. 123 (“SFAS 123”) defines other intangible assets, generally representing the excess a fair value method of accounting for employee stock of the cost over the net asset value of acquired businesses,  DOLE FOOD COMPANY, INC.

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