Dole Food Company, Inc. (“Dole”) DOLE today announced that ITOCHU
Corporation (“ITOCHU”) and Dole received unconditional approval from the
Chinese Ministry of Commerce to implement the sale of Dole's worldwide
packaged foods and Asia fresh produce business to ITOCHU.
“The Ministry of Commerce of the People's Republic of China officially
approved our antitrust filing, with no conditions or requirements, in a
decision dated January 21, 2013,” said C. Michael Carter, Dole's Executive
Vice President and General Counsel. “We are grateful to the case team of
China's Anti-monopoly Bureau of MOFCOM for their professionalism and
commitment to the timely review of our transaction with ITOCHU. We have now
received all seven required regulatory approvals, and Dole expects to complete
the sale within the next 30 days.”
Dole also announced fiscal year 2012 results for the two lines of fresh
produce business that will remain with the new Dole following the consummation
of the sale transaction: fresh fruit and fresh vegetables. The historical
results of the Dole worldwide packaged foods and Asia fresh business being
sold to ITOCHU are classified as discontinued operations.
Revenues
Revenues decreased 11% to $4.2 billion for the year ended December 29, 2012,
primarily due to the divestitures of our fresh fruit subsidiaries in Germany
and Spain, which represented $539 million of sales in 2011. Fresh fruit
revenues, excluding the impact of the divestitures, decreased 2% as a result
of lower pricing in North America bananas and unfavorable euro and Swedish
krona foreign currency movements in Europe. This was partially offset by
higher volumes of fresh pineapple sold and improved pricing for Chilean
deciduous fruit. Fresh vegetables revenues increased 8% primarily due to
improved pricing for packaged salads and sales from the October 2011 berry
acquisition, which contributed $68 million to sales in 2012. This was
partially offset by lower pricing for fresh-packed vegetables. Excluding the
sales from the berry business acquisition, fresh vegetables revenues improved
3%.
Adjusted EBITDA
Adjusted EBITDA was $146 million for the year ended December 29, 2012 compared
to $196 million in the prior year. Fresh fruit Adjusted EBITDA decreased
primarily due to lower pricing for bananas in North America as well as higher
fruit costs in Europe, partially offset by lower shipping costs in Europe. In
addition, fresh fruit earnings were impacted by provisions totaling $26
million recorded in the fourth quarter of 2012 in connection with the possible
resolution of certain legal-related matters. Fresh vegetables Adjusted EBITDA
was comparable. Higher earnings in the packaged salads and fresh berries
businesses were partially offset by lower pricing experienced during the first
half of 2012 across all major fresh-packed vegetable product lines. Packaged
salads earnings increased primarily due to improved pricing. Fresh berries
earnings increased as a result of the berry business acquisition, partially
offset by higher growing costs.
“Fresh fruit performance in 2012 was below 2011, and we expect this trend to
continue in 2013,” said Mr. Carter, who will be assuming the added role of
President and COO in connection with the ITOCHU transaction. “We continue to
see aggressive contract negotiations in the North American banana market,
driving earnings in that market to lower levels. We expect fresh vegetables
Adjusted EBITDA to improve in 2013, but not enough to offset the expected
continued decline in the North America banana market. Overall, we expect 2013
Adjusted EBITDA for the new Dole to be at the low end of the guidance range we
announced on January 2, 2013, assuming no major market changes.”
“In light of the competitive fresh produce market conditions, we are assessing
the new Dole's capital requirements and other possible near-term funding
resources, such as Dole's Hawaii land holdings,” continued Mr. Carter.
“Potential investments could include increasing the number of fresh fruit
farms owned and operated by the new Dole, and required updating of our owned
vessel fleet, which has an average age of 21 years.”
After the consummation of the ITOCHU transaction, Dole will retain six
refrigerated container vessels, ranging in ages from 14 to 24 years, as well
as seven break-bulk refrigerated vessels, ranging in ages from 19 to 27 years.
Three of the break-bulk vessels will continue to be used by the Asia Fresh
produce business following completion of the ITOCHU transaction, under a ships
usage agreement between Dole and ITOCHU. Dole also has four other break-bulk
refrigerated vessels under a charter arrangement which will terminate at the
end of 2013, and are currently under sub-charter to a third party, and a fifth
vessel under charter that is scheduled to terminate in June 2013, subject to
possible extension.
The new Dole will also retain approximately 24,700 acres in Hawaii on the
Island of Oahu, of which approximately 16,500 acres are listed for sale. Dole
farms pineapple, coffee and cacao on approximately 2,900 acres, and has an
additional 1,800 farming acres which are not currently in production. The
remaining 3,500 acres comprise gullies, washes, and other natural
non-productive land. Dole currently estimates the relatively short-term
monetization of the approximately 21,800 acres of land that Dole is not
currently farming, to be in the $175 million to $200 million range. This
range, which exceeds the current net book value for this land, is based on a
recently completed internal assessment confirmed by a nationally recognized
commercial real estate services firm.
Audited Financials
Dole expects to timely file its annual report on Form 10-K by March 14, 2013,
including its audited financial statements for fiscal year 2012. At that time,
Dole expects to issue an earnings release and will host a conference call with
investors.
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