DOLE FOOD COMPANY, INC.




     ANNUAL REPORT 1995
DOLE FOOD COMPANY’S

worldwide team of growers, packers,


processors, shippers and employees is


committed to consistent...
Dole Food Company, Inc.




F                                                  H
         INANCIAL                        ...
T       O        S                         :
    O       UR       HAREHOLDERS




Dole celebrated the completion of its 14...
BOARD OF DIRECTORS
                                                          (Seated–Left to Right) David A. DeLorenzo, Ri...
Financial Strength
global markets, our goal remains to participate in a
manner that will result in higher returns on inves...
Dole Worldwide Operations




                                                                          q
                ...
T           Y         I       R
                                                 HE          EAR       N       EVIEW



  ...
increasing share of           marketer in many of its fresh product lines. In
1995 WORLDWIDE SALES
             (in millio...
Latin America/Caribbean                                                  Dole Latin

                         America cont...
European Union protected sources in order to                     the Middle East and Far East as well as the emerg-
provid...
Europe
                                 Dole                               Dole Europe continued its growth in the

      ...
the exclusive marketer and             In January 1996, Dole signed an agreement to
                          distributor ...
Asia
                     Dole                         Dole Asia had 1995 sales of over $700 million. Asia,

             ...
Dole Food Products Include:


                                Dole Green Onions                        Dole Dried Fruit an...
F                                       H
    INANCIAL                                IGHLIGHTS




                      ...
Dole Food Company, Inc.




C                                       S                     I
    ONSOLIDATED               ...
Dole Food Company, Inc.




C                                     B              S
    ONSOLIDATED                        ...
Dole Food Company, Inc.




C                                   S                               C         F
    ONSOLIDATE...
Dole Food Company, Inc.




N                    C                              F                     S
    OTES      TO  ...
SFAS 123 when required in 1996. As a result, SFAS 123               record on December 20, 1995 received a dividend of one...
Dole1995 annual
Dole1995 annual
Dole1995 annual
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Dole1995 annual
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Dole1995 annual
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Dole1995 annual
Dole1995 annual
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Dole1995 annual
Dole1995 annual
Dole1995 annual
Dole1995 annual
Dole1995 annual
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  1. 1. DOLE FOOD COMPANY, INC. ANNUAL REPORT 1995
  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 scientific pest management programs, to quality is a commitment solidly stringent quality control measures, backed by: state-of-the-art production and transportation technologies, contin- uous improvement through research and innovation, dedication to the safety of our workers, communities and the environment.
  3. 3. Dole Food Company, Inc. F H INANCIAL IGHLIGHTS (in millions, except per share data) 1995 1994 1993 1992 1991 Revenue $3,804 $3,499 $3,108 $3,120 $2,965 Income from continuing operations before cumulative effect of accounting change $ ,120 $ , 58 $ , 62 $ ,66 $ ,139 Discontinued operations (97) 10 16 (2) (5) Cumulative effect of accounting change – – – (48) – Net income $ ,23 $ , 68 $ , 78 $ , 16 $ ,134 Earnings per common share Income from continuing operations before cumulative effect of accounting change $ 2.00 $ .98 $ 1.04 $ 1.11 $ 2.33 Discontinued operations (1.61) .16 .26 (.04) (.09) Cumulative effect of accounting change – – – (.81) – Net income $ .39 $ 1.14 $ 1.30 $ .26 $ 2.24 Average common shares outstanding 60 60 60 60 60 Total assets $2,442 $3,685 $3,159 $2,926 $2,774 Capitalization Short-term debt $ ,24 $ , 54 $ , 79 $ , 81 $ , 76 Long-term debt 896 1,555 1,111 950 803 Minority interests 26 25 39 35 27 Common shareholders’ equity 508 1,081 1,052 1,001 1,009 Total $1,454 $2,715 $2,281 $2,067 $1,915 Book value per common share $ 8.49 $18.17 $17.70 $16.85 $17.00 Common stock price at year-end $35.00 $23.00 $26.75 $32.13 $36.50 Market price range High $ ,38 $ 351/2 $ 377/8 $ , 40 $ , 48 Low $ ,24 $ 22 /2 $ 25 /8 $ , 26 $ , 28 1 7 Annual cash dividends per common share $ .40 $ .40 $ .40 $ .40 $ .40 Note: In connection with the distribution, the real estate and resorts business has been presented throughout this report as discontinued operations. Prior year amounts have been restated to conform with the 1995 presentation. 1,563 1,081 3,804 1,052 223 1,009 1,001 3,499 3,120 3,108 193 2,965 1,155 175 166 995 138 847 843 508 91 92 93 94 95 91 92 93 94 95 91 92 93 94 95 91 92 93 94 95 COMMON REVENUE O P E R AT I N G I N C O M E NET DEBT SHAREHOLDER’S EQUITY (in millions) (in millions) (in millions) (in millions) 1
  4. 4. T O S : O UR HAREHOLDERS Dole celebrated the completion of its 144th year in held corporation, traded on the New York Stock 1995. It was a year of significant accomplishments. Exchange under the symbol “CCS,” owns the real We made substantial improvements in our financial estate and resorts business previously conducted position, expanded key business activities, and by Dole. As a result of the separation, sharehold- divested lower return assets and businesses. We ers are able to separately evaluate the perfor- achieved our long-term goal of separating our real mance of these two distinct businesses. estate and resorts business from our food business. This series of achievements significantly enhanced Operations In 1995 our food business posted a number of shareholder value in 1995. The market value of significant achievements. Revenue grew to $3.8 Dole, including the value of Castle & Cooke, Inc., billion, a strong 14% increase over the prior year, increased by over $1 billion in 1995. excluding revenue from divested businesses. The strong performance of many of our food business- Real Estate Distribution Dole had long been a large owner of real estate. es resulted in operating income for 1995 of $193 These holdings included the world-class resort million, a 40% increase over 1994. Our worldwide hotels on the Island of Lana’i, substantial residen- banana, fresh vegetable, processed and fresh tial developments and homebuilding operations in pineapple operations all posted improved results Hawaii, California and Arizona and commercial over 1994. In all, we are pleased with the results and industrial properties in Hawaii, California, posted by our food businesses which reflect the Arizona and the Southeastern United States. Lana’i’s positive effect of the capital invested and strategic resorts are spectacular and have been the recipient programs implemented over the last few years. of many prestigious awards in recognition of its fine hotels, golf courses and new residential develop- Product Expansion We are enthusiastic about the growth and accep- ments. The award winning residential developments tance of our value added pre-cut salad business. In in Hawaii and master planned communities in 1995 we introduced such innovative product line Bakersfield continue to win high praises. Despite extensions as the fat free complete salads and, these successes, Dole concluded that its shareholders most recently, Lunch for One single serving salads. are best served by the separation of its real estate We continued to expand our distribution network and resorts business from the food business as these throughout Europe and made investments in dis- businesses are distinct in investment, operation tribution companies in Germany, Spain and Italy. and financial characteristics. During 1995, Dole We also expanded our product line offering in successfully completed the separation by distrib- Europe. We entered into a joint venture with a uting to its shareholders the common stock of large South African producer of processed fruits. Castle & Cooke, Inc. The new, separate, publicly 2
  5. 5. BOARD OF DIRECTORS (Seated–Left to Right) David A. DeLorenzo, Richard M. Ferry, James F. Gary, Elaine L. Chao, David H. Murdock (Standing–Left to Right) Mike Curb, Frank J. Hata encompassed 3,900 products and services of approx- Further, in January 1996, we signed an agreement imately 200 companies and government agencies. which will result in Dole’ s ownership of substan- We are pleased that Dole’s continuous investments tially all of the outstanding shares of Pascual in quality assurance programs are recognized by Hermanos, a leading Spanish grower/marketer of consumers. Dole will continue its strict quality citrus and fresh vegetables. These actions position control programs to ensure consumers will be Dole as a major participant in the European fresh, satisfied with our products year after year. dried and packaged fruit and vegetable markets. Number One in Customer Satisfaction I n c r e a s e i n S h a r e h o l d e r ’s E q u i t y One of the most comprehensive customer satisfac- Our 1995 results were also strengthened as we tion studies ever done, conducted by the University continued to execute plans to divest of certain of Michigan Business School and the American assets and businesses that do not meet our long- Society of Quality Control, rated Dole number one term growth strategies and performance expectations. in customer satisfaction for the second consecutive While we are committed to providing high quality year as published by Fortune magazine. The survey fresh produce and packaged products to the 3
  6. 6. Financial Strength global markets, our goal remains to participate in a manner that will result in higher returns on invest- As a result of the multiple efforts expended dur- ed capital and create a more stable earnings base. ing the year, Dole enters 1996 with a very strong We completed the sale of our juice and juice financial position and a significantly improved beverage business to The Seagram Company Ltd., balance sheet. Dole began 1995 with net debt owner of Tropicana Products, for net proceeds of exceeding $1.5 billion and ended the year with $270 million. Given Seagram’s greater presence in net debt of $847 million, a reduction in borrowing the juice business and economies of scale, we of over $700 million. We continue to enjoy the expect to significantly benefit from its ability to support from our multinational bank group. expand the Dole brand. Dole continues to own its Outlook canned pineapple juice business. We have sold, and have under active negotiation, We are pleased with Dole’s accomplishments in selected agricultural land in North America. It is our 1995 and the associated value created for you, objective to retain the production from most of these our shareholders. We are excited about the future properties to process through our packing/distribution prospects for Dole as we focus on the worldwide systems. In North America, we intend to participate growth opportunities of our food business and the more selectively in the growing of fresh produce and resulting continued creation of shareholder value. will continue to downsize our ownership of agricul- Our sincere gratitude and appreciation to our tural land properties. During 1995, we also divested 43,000 employees throughout the world. Without our North American pistachio nut business. their advice, dedication and energy, our 1995 accomplishments would not have been possible. Management We further applaud their achievement in upholding We are pleased to announce that in March 1996, Dole’s number one ranking with customers for David A. DeLorenzo was promoted to the position service, quality and value for two consecutive years. of president and chief operating officer with all We wish to thank our shareholders and cus- operating division presidents reporting directly to tomers for their continued support and confidence. him. Our management group is comprised of well- Sincerely, seasoned executives who are particularly knowledge- able in their respective areas as well as the food industry in general. Working closely with Mr. DeLorenzo, who has served Dole in various execu- David H. Murdock tive capacities throughout the world for more than Chairman and Chief Executive Officer 25 years, our team will continue to work together in maximizing the growth, profits and value of Dole. March 1996
  7. 7. Dole Worldwide Operations q q qq q q q q q q q v qvq v q qv q qqq q q q qq q s q s v vq q q qq qv q q sqv s s vq sq q q sq q 5s q q q q q q s s q q q s q q q q q qq q q s qs q s s q q sq sq sq q s q q ss q q s sq s sq sq s s s q q q q s s q q q s s s q s Sourcing s q q v Ripening/Distribution q s q Markets 5 Corporate q Portugal FOOD OPERATING Martinique Bahrain Honduras Qatar DIVISIONS AND LOCATIONS Mexico Belarussia Jamaica Romania Nicaragua Belgium Martinique Europe and Africa Russia Panama Bosnia Mexico Belgium Saudi Arabia Peru Bulgaria Netherlands-Antilles Cameroon Senegal Venezuela Croatia Panama Canary Islands Slovakia Windward Islands Czech Republic Peru France Spain Denmark Trinidad & Tobago Germany Asia Sweden Estonia Uruguay Greece Australia Switzerland Egypt Venezuela Italy China Syria Finland Ivory Coast Japan Asia Tunisia France Netherlands New Zealand Australia Turkey Germany Somalia Philippines China Ukraine Greece South Africa Thailand Hong Kong United Arab Emirates Hungary Spain Indonesia North America United Kingdom Iceland Tunisia Japan Canada India Turkey Malaysia Latin America and United States Ireland United Kingdom New Zealand Caribbean Arizona Italy Argentina Philippines California Latin America and Jordan Bahamas Singapore Florida Caribbean Kuwait Barbados South Korea Argentina Hawaii Latvia Bermuda Taiwan Chile Washington Lebanon Brazil Thailand Colombia Lithuania Chile Costa Rica FOOD MARKETING North America Luxembourg Colombia Dominican Republic DIVISIONS AND LOCATIONS Canada Malta Costa Rica Ecuador United States Europe and Morocco Dominican Republic Guadeloupe Middle East Netherlands Ecuador Guatemala Albania Norway Guadeloupe Honduras Algeria Oman Guatemala Jamaica Austria Poland
  8. 8. T Y I R HE EAR N EVIEW North America Dole The North American food business performed extremely well in 1995. With sales of approximately $1.9 billion, Dole’s North American customers are supplied with a wide array of high quality, wholesome products including bananas, fresh and processed pineapple, fresh vegetables (including value added pre-cut salad), citrus, apples, grapes, stonefruit, and dried fruit and nuts. DUE TO the breadth of its product line, Dole is Vegetable operations achieved record earnings uniquely able to create multiple opportunities in both the value added and commodity segments. for “store-wide” recognition of its fresh and Value added results are expected to approximate processed products. Dole will continue to leverage those of the branded segment in 1996. This these synergies which benefit both Dole and its represents the successful restructuring of Dole’s retail customers. vegetable business to leverage the stability of value added products while capitalizing on favorable market conditions for commodities. The fresh fruit operations continue to improve with deciduous fruit sourced from both North America and Chile realizing very strong returns in 1995. Citrus and apples returns are above initial expecta- tions and should improve further in 1996 as efforts continue to dispose of selected agricultural properties D O L E W O R L D W I D E O P E R AT I O N S G R O U P that do not meet Dole’s return criteria. (Seated–Left to Right) David A. DeLorenzo, PRESIDENT, & The value added vegetable business is now an COO, Andrew J. Biles, EXECUTIVE VICE PRESIDENT & COO EUROPE, David Green, PRESIDENT, DOLE NORTHWEST, William F. established, accepted and expanding segment of Feeney, PRESIDENT, DOLE EUROPE, David H. Murdock, CHAIRMAN & CEO (Standing–Left to Right) Gregory L. Costley, nearly all supermarkets, representing about eight PRESIDENT, DOLE NORTH AMERICA FRUIT, Benjamin Paz, PRESIDENT, DOLE LATIN AMERICA, Lawrence A. Kern, PRESIDENT, percent of produce sales in the United States. As DOLE FRESH VEGETABLES, Paul Cuyegkeng, PRESIDENT, DOLE ASIA (Not Pictured) Peter M. Nolan, PRESIDENT, DOLE PACKAGED consumers continue to seek fresh, healthy, ready- FOODS, Gerald W. LaFleur, EXECUTIVE VICE PRESIDENT, Roberto to-eat foods, pre-cut fresh produce will gain an Zacarias, PRESIDENT, DOLE HONDURAN BEVERAGE. 6
  9. 9. increasing share of marketer in many of its fresh product lines. In 1995 WORLDWIDE SALES (in millions) the consumer’s food selective cases, Dole plans to modify its participation Packaged budget. During 1995, as a grower with the goal of achieving higher, $996 Vegetables $667 Dole’s retail sales of more stable returns on invested capital. Dole has value added products sold or is negotiating to sell other agricultural grew significantly, land in North America to further reduce its com- outpacing industry modity exposure and increase returns. growth. Dole expects In other fresh branded categories, Dole contin- strong continued ued its emphasis on the agricultural service, pack- Fresh Fruit $2,141 growth in this category ing and market segments. Dole believes it can with new offerings such as five fat free complete achieve higher, more stable returns per investment salads, two complete salads and three special dollar in these areas as this revenue structure is blends introduced in 1995. In 1996, the single more fee-for-service based and less dependent on serve salad with dressing and bread will be intro- the growing aspects of the agri-business. duced offering an affordable complete meal for individuals at work or home. Continuing its lead in quality and technology, Dole was commended by Food Engineering maga- zine, which voted the recently completed Dole Value Added Products Plant at Soledad, California, “New Plant of the Year.” It recognized that the plant “leapfrogs conventional plant design to set a new standard in the fresh vegetable industry.” Dole is setting the pace in serving retail customer needs. Through a category management program for its value added salads, Dole will be the first major company in the produce industry Recognized as “New Plant of the Year,” Dole’s Soledad to help customers manage store shelves to optimize facility processes vegetables in a sterile environment to assure the highest quality and freshness for consumers. return on investments. Dole will also provide Dole is gradually changing its product mix to value added products in closer proximity to better meet emerging consumer preferences and customers to quickly respond to fluctuations in seasonal requirements. For example, Dole is customer requirements. These major services emphasizing new apple and grape varieties and will assure closer partnering relationships with exploring opportunities in fresh and processed retail customers and are designed to increase fruit. While Dole continues to offer produce year- Dole’s profitability. round, it will concentrate on seasonal periods that Historically, Dole North America has been traditionally offer superior prices. vertically integrated as a grower, packer and 9
  10. 10. Latin America/Caribbean Dole Latin America continues to be a premier source of fresh fruit that is distributed worldwide by Dole’s controlled shipping and distribution network. Dole sources fruit from 11 Latin American countries and three Caribbean nations. Dole operates the largest refrigerated container fleet in the industry between Latin America and one of its key markets, North America. DOLE refrigerated containers provide the most efficient owned plantations or from associated growers. system to transport perishable cargo to its quality-and- Dole personnel ensures that Dole’s stringent fruit service oriented customers in North America. Once quality standards are met and maintained. The fresh fruit is loaded into refrigerated containers, the banana industry continues to produce more fruit proper temperature is maintained and produce is not than can be sold through traditional markets on a handled until it is delivered to the customer’s year-round basis. Dole has effectively devel- oped distribution capacity in new, emerging markets to alleviate oversupply conditions in traditional markets. Dole’s success is due in large part to its position as a low cost producer with consistent high quality and service levels. While North America is Dole’s largest market for bananas, Dole also continues to grow at a rapid rate in Europe despite the European Union banana regime restricting the entry of Latin American sourced bananas. Dole’s success in the European market is due to Dole fresh produce is field packed at harvest, minimizing handling and ensuring farm-to-table freshness. its strategy of adapting to distribution center. Dole also operates an efficient fleet market requirements of modern refrigerated vessels, servicing the European rather than solely relying Union, Eastern Europe, the Mediterranean, and on governmental assistance. certain Far Eastern and Middle Eastern markets. Dole has extended its Dole bananas featured collectible Muppet Dole manages the sourcing and distribution of banana sourcing to include stickers for kids in a cross promotion with the market requirements for its major product — significant volumes from the popular 1996 film, bananas. Bananas are sourced from either Dole- both Latin American and MUPPET TREASURE ISLAND. 10
  11. 11. European Union protected sources in order to the Middle East and Far East as well as the emerg- provide maximum service to its customers. In ing Latin American markets. Dole also sources addition, Dole started a direct service into Russia fresh pineapples, citrus, melons and mangos for in 1995 with discharges in St. Petersburg and a North America and Europe. new service to the Black Sea, which covers In 1996, Dole expects to continue to benefit Southern Russia and other emerging markets of from its restructuring started several years ago, the area. Dole also commenced direct service from encompassing every level of production and Latin America to New Zealand. distribution. The main thrust of this strategy is to Dole, the largest fruit focus on improved productivity, quality and exporter from Chile, achieved efficiency, and to leverage the Latin American its fifth straight record year in infrastructure for ever improving returns. Dole volume and sales. Chile is maintains strict quality and cost control of Dole’s major winter source for company-owned farms as well as of those of its grapes, apples, pears, stonefruit and kiwis. In associated growers for which technical support recent years, Dole has made several strategic and other services are provided. Dole’s commitment investments in sourcing, packing and cold storage. to serve and assist its associate growers assures These investments have allowed Dole to increase continued loyalty and support and maintains a its volume in apples, stonefruit and kiwis to meet high level of product quality. market requirements in North America, Europe, Dole pineapple, the SMOOTH CAYENNE variety of pineapple and the same variety originally planted by James Dole in the early 1900s, was voted number one in the 1995 AMERICAN CONSUMER SATISFACTION INDEX. 13
  12. 12. Europe Dole Dole Europe continued its growth in the European Union, Eastern Europe, Scandinavia, the Mediterranean countries and Russia. Dole’s European sales have grown 20% from 1994 to over $900 million in 1995. The Dole European group, including joint ventures and alliances with Jamaica Producers Fruit Distributors and Compagnie Fruitiere, had sales of over $1.4 billion. IN CONTRAST to Dole’s North American customer alliances with Compagnie Fruitiere, France, and base of supermarket chains and a few large whole- Jamaica Producers Fruit Distributors, UK, while salers, its European customers have been regional building Dole Food España by acquiring several distributors and processors. Three years ago, Dole distribution companies in Spain. began to forward integrate into distribution to Dole began developing an Italian distribution gain logistics efficiencies and work more closely network in 1995 by acquiring companies in Rome with retailers to enhance the profit potential of and near Florence. A state-of-the-art banana both Dole and the retailer. ripening facility was also built near Rome. Dole now sources Italian fruit and vegetables, using specialized packaging for Italian supermarkets Fresh Produce Distribution Centers During 1995, Dole expanded distribution to retailers and also exports products to other Dole companies in France and the United Kingdom by maximizing in France, Spain, Turkey and Egypt. Processed Fruit Dole, through its wholly- owned subsidiary, Saman, is the leading dried fruit and nut company in France. Despite rising raw material prices and a very competitive retail sec- tor, Saman reported strong 1995 earnings. Leveraging off its well established canned pineapple business in Europe, Dole formed a strategic alliance with Langeberg The Dole America is among Dole’s fleet of technologically Food Limited of South Africa. advanced refrigerated vessels which bring fresh produce Under the alliance, Dole will be to market. 14
  13. 13. the exclusive marketer and In January 1996, Dole signed an agreement to distributor in Europe of acquire Pascual Hermanos, Spain’s foremost Langeberg’s deciduous Spanish citrus and vegetable producer and canned products under exporter. Pascual Hermanos has long been the both the Dole brand and best known name in Spain for high quality produce private label. This opportu- and has enjoyed high recognition by English, In 19,000 elementary schools nationwide, 5 A nity allows Dole to expand French and German retailers. The Pascual Day Adventures received its brand presence in Hermanos production capability, together with the highest rating by Consumer’s Union for processed fruit in retail Dole’s technology and capability in vegetable corporate sponsored educational material. markets throughout Europe. growing, packing and distribution in Europe, makes Pascual Hermanos a key element for Dole’s strategic growth plans in Europe. Developing Sources Dole is broadening its strong European relationships Dole will continue its growth in both distribu- with supermarkets and its distribution network by tion and new products throughout the European expanding its product line. Compagnie Fruitiere Union, Eastern Europe and Russia and the has established a joint venture in the Ivory Coast Mediterranean countries. to produce and export pineapples and bananas. Dole fresh vegetables are harvested, processed, packaged and rapidly shipped to maintain freshness and the highest quality. 17
  14. 14. Asia Dole Dole Asia had 1995 sales of over $700 million. Asia, with a population of 2.5 billion and a growing demand for fresh fruit and vegetables, represents a key growth market for Dole. As agricultural land in Japan, Korea and Taiwan continues to be converted to commercial and industrial use, and other Asian coun- tries enjoy a rising standard of living, profitable growth opportunities for Dole abound. and East Russian markets. In New Zealand, Dole Sales and Distribution DURING 1995, Dole completed construction of its completed the acquisition of the banana importing Nagoya integrated distribution facility which ripens business of Chiquita Brands New Zealand Ltd. bananas and processes other value added products. This facility will be supported by a new state-of-the- Product Sourcing art cold storage facility which was completed by a Dole Asia manages in excess of $200 million in strategic partner for Dole’s exclusive use in Nagoya. production assets in the Philippines and Thailand The fifth Dole center is scheduled for completion in consisting of 45,000 acres of agricultural land as 1996 and will service the Tokyo markets. well as three integrated canneries which supply its Dole continues to expand in other markets. worldwide requirements for processed pineapple. In the Philippines, Dole restructured its sales Weather conditions had a major impact on force to better serve the local market require- product sourcing in 1995. Thailand suffered a ments and has also made inroads into Chinese drought in late 1994, producing a severe pineap- ple shortage in 1995. Changing weather patterns in the Philippines also produced seasonal short- falls in bananas and pineapples. Throughout these periods, Dole’s logistical and distribution systems worked well to manage the production peaks and valleys and to meet customers’ needs. Dole’s geo- graphical diversification also helped alleviate the impact of adverse weather conditions. Consistent with Dole’s corporate emphasis on quality management procedures, Dole Asia recently completed its International Standards Organization (“ISO 9000”) product quality certification in record time for its four divisions in the Philippines. Dole employees pack fresh broccoli at a new integrated distribution facility in Nagoya, Japan. 18
  15. 15. Dole Food Products Include: Dole Green Onions Dole Dried Fruit and Nuts Dole Fresh Fruit Dole Blanched Slivered Almonds in Dole Apples Dole Red Sweet Onions Reclosable Bags Dole Apricots Dole Sugar Peas Dole Blanched Whole Almonds in Dole Bananas Dole Idaho Potatoes Reclosable Bags Dole Cherries Dole Radishes Dole Chopped Natural Almonds in Dole Coconuts Reclosable Bags Dole Grapefruit Dole Fresh-Cut Vegetables Dole Sliced Natural Almonds in Dole Grapes Dole Peeled-Mini Carrots Reclosable Bags Dole Honeydew Melon Dole Shredded Carrots Dole Whole Natural Almonds in Dole Kiwi Dole Shredded Lettuce Reclosable Bags Dole Lemons Dole Shredded Green Cabbage Dole Roasted Almonds in Dole Mangos Dole Shredded Red Cabbage Single Serve Bags Dole Nectarines Dole Cole Slaw Dole Seedless Raisins Carton Dole Oranges Dole Classic Salad Dole Golden Seedless Raisins Dole Peaches Dole American Special Blend Salad Dole Seedless Raisins Mini Snacks Dole Pears Dole French Special Blend Salad Dole Seedless Raisins in Dole Persimmons Dole Italian Special Blend Salad Single Serve Bags Dole Pineapple Dole European Special Blend Salad Dole Seedless Raisins Canister Dole Pineapple Fresh-Cut Bags Dole Romaine Special Blend Salad Dole Seedless Raisins in Reclosable Bags Dole Plums Dole Complete Spinach/Bacon Salad Dole Seedless Raisins 6 packs Dole Pomegranates Dole Complete Oriental Salad Dole Pitted Dates Carton Dole Raspberries Dole Complete Sunflower Ranch Salad Dole Chopped Dates Carton Dole Strawberries Dole Complete Romano Salad Dole Whole Dates Cup Dole Tangelos Dole Complete Caesar Salad Dole Pitted Dates Gelatin Mold Cup Dole Tangerines with Fat Free Dressing Dole Pitted Dates Cup Dole Complete Herb Ranch Salad Dole Chopped Dates Cup with Fat Free Dressing Dole Fresh Vegetables Dole Medjool Dates Dole Artichokes Dole Complete Raspberry Romaine Salad Dole Date Nut Roll Dole Asparagus with Fat Free Dressing Dole Baking Dates Dole Bell Peppers Dole Complete Tangy French Salad Dole “Hawaiian Style” Trail Mix in Dole Bok Choy with Fat Free Dressing Single Serve Bags Dole Broccoli Dole Complete Zesty Italian Salad Dole “California Style” Trail Mix in Dole Brussels Sprouts with Fat Free Dressing Single Serve Bags Dole Butter Lettuce Dole Pitted Prunes Carton Dole Carrots Dole Packaged Foods Dole Pitted Prunes Canister Dole Cauliflower Dole Crushed Pineapple in Juice, Syrup Dole Pitted Prunes in Reclosable Bags Dole Celery Dole Pineapple Chunks in Juice, Syrup Dole Large Prunes in Reclosable Bags Dole Green Leaf Lettuce Dole Pineapple Slices in Juice, Syrup Dole Breakfast Prunes in Reclosable Bags Dole Iceberg Lettuce Dole Pineapple Tidbits in Juice, Syrup Dole Red Batavia Lettuce Dole Pineapple Snack Wedges Dole Red Butter Lettuce Dromedary Dole Mandarin Orange Segments Dromedary Pitted Dates Dole Red Leaf Lettuce Dole Tropical Fruit Salad Dromedary Chopped Dates Dole Romaine Lettuce Dole Tropical Fruit Salad Snack Cup Dole Napa
  16. 16. F H INANCIAL IGHLIGHTS 3,804 223 244 3,499 3,120 193 3,108 211 2,965 175 166 178 168 138 108 91 92 93 94 95 91 92 93 94 95 91 92 93 94 95 REVENUE O P E R AT I N G I N C O M E O P E R AT I N G C A S H F L O W (in millions) (in millions) (in millions) 16.0% 259 14.0% 212 174 164 7.6% 6.5% 6.4% 90 91 92 93 94 95 91 92 93 94 95 RETURN ON EQUITY C A P I TA L E X P E N D I T U R E S (in millions) (in millions) 20
  17. 17. Dole Food Company, Inc. C S I ONSOLIDATED TATEMENTS OF NCOME (in thousands, except per share data) 1995 1994 1993 Revenue $3,803,846 $3,498,553 $3,108,381 Cost of products sold 3,217,869 2,965,675 2,608,951 Gross margin 585,977 532,878 499,430 Selling, marketing and administrative expenses 392,694 394,763 333,374 Cost reduction program – – 42,500 Operating income 193,283 138,115 123,556 Interest expense (81,186) (76,911) (58,457) Interest income 7,501 9,884 10,344 Net gain on assets sold or held for disposal 61,655 – – Other expense – net (5,429) (2,943) (9,710) Income from continuing operations before income taxes 175,824 68,145 65,733 Income taxes (56,000) (9,900) (3,600) Income from continuing operations 119,824 58,245 62,133 Discontinued operations: Income (loss) from discontinued operations, net of income taxes (93,543) 9,638 15,756 Distribution expenses, net of income taxes (2,950) – – Income (loss) from discontinued operations (96,493) 9,638 15,756 Net income $ ,23,331 $ , 67,883 $ , 77,889 Earnings (loss) per common share, primary and fully diluted Continuing operations $ ,2.00 $, .98 $, 1.04 Discontinued operations (1.61) .16 .26 Net income $ , .39 $, 1.14 $, 1.30 See Notes to Consolidated Financial Statements. 21
  18. 18. Dole Food Company, Inc. C B S ONSOLIDATED ALANCE HEETS (in thousands, except shares outstanding) 1995 1994 Current assets Cash and short-term investments $ , 72,151 $ , 45,162 Receivables – net 462,303 494,755 Inventories 559,660 552,523 Prepaid expenses 43,087 46,569 Total current assets 1,137,201 1,139,009 Investments 63,319 58,683 Property, plant and equipment – net 1,016,991 1,273,545 Long-term receivables – net 28,409 38,763 Other assets 196,272 108,917 Net assets held for distribution – 1,065,702 $2,442,192 $3,684,619 Current liabilities Notes payable $ , 21,778 $ , 50,366 Current portion of long-term debt 1,779 3,450 Accounts payable 182,152 173,463 Accrued liabilities 451,181 416,987 Total current liabilities 656,890 644,266 Long-term debt 895,998 1,554,504 Other long-term liabilities 354,545 380,527 Minority interests 26,324 24,681 Common shareholders’ equity Common stock (shares outstanding: 1995 – 59,854,739; 1994 – 59,478,108) 320,497 320,121 Additional paid-in capital 170,266 165,541 Retained earnings 58,269 634,717 Cumulative foreign currency translation adjustment (40,597) (39,738) Total common shareholders’ equity 508,435 1,080,641 $2,442,192 $3,684,619 See Notes to Consolidated Financial Statements. 22
  19. 19. Dole Food Company, Inc. C S C F ONSOLIDATED TATEMENTS OF ASH LOW (in thousands) 1995 1994 1993 Operating activities Income from continuing operations $ ,(119,824 $ (58,245 $,(62,133 Adjustments to continuing operations Depreciation and amortization 123,671 119,847 105,975 Equity earnings net of distributions (6,533) (2,539) (3,503) Net gain on assets sold or held for disposal (61,655) – – Provision (benefit) for deferred income taxes 30,429 14,073 (31,268) Charge for cost reduction program – – 42,500 Other 41 1,191 (956) Change in operating assets and liabilities, net of effects from acquisitions Receivables – net 53,142 (103,628) (19,624) Inventories (57,588) 1,376 16,635 Prepaid expenses 445 (9,383) (7,823) Other assets (19,245) (29,086) (20,345) Accounts payable and accrued liabilities 57,995 35,252 (33,553) Income taxes payable (27,153) 8,558 (5,636) Other 21,246 20,573 (1,055) Cash flow from operating activities of continuing operations 234,619 114,479 103,480 Cash flow (used in) from operating activities of discontinued operations (11,467) (44,906) 27,182 Cash flow from operating activities 223,152 69,573 130,662 Investing activities Proceeds from sales of businesses and assets 432,746 17,223 17,072 Capital additions (90,276) (211,882) (173,514) Purchases of investments and acquisitions, net of cash acquired (35,251) (66,660) (47,198) Other 998 879 2,320 Cash flow from (used in) investing activities of continuing operations 308,217 (260,440) (201,320) Cash flow used in investing activities of discontinued operations (15,144) (143,635) (106,717) Cash flow from (used in) investing activities 293,073 (404,075) (308,037) Financing activities Short-term borrowings 29,348 54,213 78,244 Repayments of short-term debt (62,944) (69,202) (98,514) Long-term borrowings 12,384 462,885 548,882 Repayments of long-term debt (675,098) (33,952) (398,212) Proceeds from distribution of real estate and resorts business 235,186 – – Cash dividends paid (23,861) (23,791) (23,784) Other 5,101 1,170 1,264 Cash flow (used in) from financing activities of continuing operations (479,884) 391,323 107,880 Cash flow (used in) from financing activities of discontinued operations (9,352) (45,712) 67,970 Cash flow (used in) from financing activities (489,236) 345,611 175,850 Increase (decrease) in cash and short-term investments 26,989 11,109 (1,525) Cash and short-term investments at beginning of year 45,162 34,053 35,578 Cash and short-term investments at end of year $ ,(72,151 $ (45,162 $ (34,053 See Notes to Consolidated Financial Statements. 23
  20. 20. Dole Food Company, Inc. N C F S OTES TO ONSOLIDATED INANCIAL TATEMENTS Note 1 – Nature of Operations determining net income and resulted in net losses of $2.4 million, $3.5 million, and $3.6 million, for 1995, Dole Food Company, Inc. and its consolidated sub- 1994 and 1993, respectively. Net foreign exchange gains sidiaries (“the Company”) is engaged in the worldwide or losses resulting from the translation of assets and sourcing, processing, distributing and marketing of liabilities of foreign subsidiaries whose local currency is high quality, branded food products including fruits, the functional currency are accumulated in a separate vegetables and nuts in the following locations: North component of common shareholders’ equity. America; Latin America, principally Chile, Colombia, Costa Rica, Ecuador, Guatemala, Honduras and Panama; Income Taxes – Deferred income taxes are recognized for Asia, principally Japan, the Philippines and Thailand; the tax consequences of temporary differences by apply- and Europe, principally France, Germany, Italy, Spain ing enacted statutory tax rates to the differences between and the United Kingdom. The Company also conducts financial statement carrying amounts and the tax bases other operations in Honduras, primarily beverage of assets and liabilities. The income taxes which would bottling. be due upon the distribution of foreign subsidiary earn- ings have not been provided where the undistributed The Company’s principal products are produced both earnings are considered permanently invested. directly on Company-owned or leased land and through associated producer and independent grower arrange- Earnings Per Common Share – Primary earnings per com- ments. The Company’s products are primarily packed and mon share are based on the weighted average number of processed by the Company and sold to retail and institu- shares outstanding during the period after consideration tional customers and other food product companies. of the dilutive effect of stock options and restricted stock awards. The primary weighted average number of com- Note 2 – Summary of Accounting Policies mon shares outstanding was 59.8 million for 1995 and 59.7 million for 1994 and 1993. Principles of Consolidation – The consolidated financial statements include the accounts of all significant Cash and Short-Term Investments – Cash and short-term majority-owned subsidiaries. All significant intercompany investments include cash on hand and time deposits. transactions have been eliminated. Such short-term investments generally have original maturities of three months or less. Annual Closing Date – The Company’s fiscal year ends on the Saturday closest to December 31. Fiscal years 1995, Fair Value of Financial Instruments – For short-term 1994 and 1993 ended on December 30, 1995, December financial instruments the historical carrying amount is 31, 1994 and January 1, 1994, respectively. a reasonable estimate of fair value. For long-term finan- cial instruments not readily marketable, fair values were Inventories – Inventories are stated at the lower of cost estimated based upon discounted future cash flows at or market. Cost is determined principally on a first-in, prevailing market interest rates. Based on these assump- first-out basis. Specific identification and average tions, management believes the fair market values of the cost methods are also used for packing materials and Company’s financial instruments other than certain debt operating supplies. instruments (see Note 7) are not materially different Agricultural Costs – The costs of growing bananas and from their recorded amounts as of December 30, 1995. pineapples are charged to operations as incurred. Grow- Stock Based Compensation – In October 1995, the Finan- ing costs related to other crops are recognized when the cial Accounting Standards Board issued Statement of crops are harvested and sold. Financial Accounting Standards No. 123, “Accounting for Investments – Investments in affiliates with ownership of Stock-Based Compensation”(“SFAS 123”). SFAS 123 20% to 50% are generally recorded on the equity method. defines a fair value based method of accounting for employee stock compensation plans, but allows for the Property, Plant and Equipment – Property, plant and continuation of the intrinsic value based method of equipment are stated at cost, less accumulated depre- accounting to measure compensation cost prescribed by ciation. Depreciation is computed principally by the Accounting Principles Board Opinion No. 25 “Accounting straight-line method over the estimated useful lives of for Stock Issued to Employees” (“APB 25”). For com- the assets. panies electing not to change their accounting, SFAS 123 Foreign Exchange – The United States (“U.S.”) dollar is requires pro forma disclosures of earnings and earnings the functional currency for substantially all of the Com- per share as if the change in accounting provisions of pany’s consolidated operations. Net foreign exchange SFAS 123 had been adopted. The Company has elected transaction gains or losses for companies with the U.S. to continue to utilize the accounting method prescribed dollar as their functional currency are included in by APB 25 and adopt the disclosure requirements of 24
  21. 21. SFAS 123 when required in 1996. As a result, SFAS 123 record on December 20, 1995 received a dividend of one will have no effect on the financial condition or results share of Castle common stock for every three shares of of operations of the Company. the Company’s common stock. The distribution is not currently taxable to the Company’s shareholders since Use of Estimates – The preparation of financial state- the Company did not, for federal income tax purposes, ments in conformity with generally accepted accounting have current earnings and profits for 1995 or accumu- principles requires management to make estimates and lated earnings and profits as of the distribution date. assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and Under the plan of distribution, the Company transferred liabilities at the date of the financial statements and the approximately $1.0 billion of net assets to Castle, and in reported amounts of revenues and expenses during the partial consideration thereof the Company received cash reporting period. Actual results could differ from those proceeds of approximately $235 million and a $10 million estimates. Management believes that these estimates note receivable from Castle which bears interest at the and assumptions provide a reasonable basis for the fair rate of 7% per annum and is due December 8, 2000. As presentation of the financial statements. a result of the distribution, the Company’s common shareholders’ equity was reduced by approximately Reclassifications – Certain prior year amounts have been $582 million. (See Note 10.) reclassified to conform to the 1995 presentation. In connection with the distribution, the operating Note 3 – Acquisitions and Dispositions results of the real estate and resorts business have been accounted for as discontinued operations. The 1994 During 1995, the Company acquired various food and 1993 consolidated financial statements have been operations located in Europe for an aggregate cash pur- restated to conform with the 1995 presentation. chase price of approximately $35 million. During 1994, the Company acquired a 35% interest in a produce distri- During 1995, the Company elected to adopt Statement bution company in the United Kingdom and various of Financial Accounting Standards No. 121, “Accounting other food and food related operations for an aggregate for the Impairment of Long-Lived Assets and Long-Lived purchase price of approximately $64 million. Each of Assets to be Disposed of” (“SFAS 121”), which requires an these acquisitions was accounted for as a purchase and impaired property to be written down to fair value. The accordingly, the purchase price was allocated to the net Company reviewed certain of its real estate and resort assets acquired based upon their estimated fair values properties to determine whether expected future cash as of the date of acquisition. The fair values of assets flows (undiscounted and without interest charges) from acquired and liabilities assumed were $70 million each property would result in the recovery of the carrying (including cash of $3 million) and $35 million for 1995 amount of such property. Certain adverse developments and $91 million (including cash of $1 million) and affecting the Lana’i resort properties which occurred $27 million for 1994. subsequent to the Company’s 1994 year end caused management to substantially lower its estimates of future Subsequent to December 30, 1995 the Company signed cash flow and led to a determination that the Lana’i resort an agreement to acquire a Spanish grower/marketer of properties were impaired in accordance with generally citrus and fresh vegetables for approximately $25 mil- accepted accounting principles. In accordance with State- lion. The acquisition is expected to be completed in the ment of Financial Accounting Standards No. 67, “Account- first quarter of 1996. ing for Costs and Initial Rental Operations of Real Estate During 1995, the Company completed the sale of its world- Projects” (“SFAS 67”), each of the Company’s real estate wide juice and juice beverage business, resulting in net projects was carried at the lower of cost or net realizable proceeds of approximately $270 million and a pretax gain value, with net realizable value deemed to be the undis- of approximately $145 million. In addition, during 1995 counted estimated future cash flows from the project. the Company began to implement its plan to sell certain Under SFAS 67, the Lana’i resort properties would have of its agricultural properties and other assets which have been written down by approximately $91 million to their generated low returns. The book value of the assets to be net realizable value. In accordance with SFAS 121, an sold exceeded the estimated fair value less costs to sell, impairment loss of $103.8 million after tax was recorded resulting in an adjustment of $83.3 million. The above as part of discontinued operations in the accompanying dispositions resulted in a net pretax gain of $61.7 million. 1995 statement of income. Revenues from discontinued operations for 1995, 1994 Note 4 – Discontinued Operations and 1993 were $349 million, $343 million and $322 mil- On December 28, 1995, the Company completed the lion, respectively. Income (loss) from discontinued opera- separation of its real estate and resorts entity, Castle & tions reflects an allocation of the Company’s overall Cooke, Inc. (“Castle”) from its food business. In connec- interest costs, based on the cash proceeds and the inter- tion with the distribution, each Company shareholder of est bearing note received by the Company at distribution, 25

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