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Dole Food Company, Inc. Reports First Quarter 2013 Results

  Dole Food Company, Inc. Reports First Quarter 2013 Results

           Provides Guidance for Second Quarter and Full Year 2013

                       Updates on New Capital Structure

Business Wire

WESTLAKE VILLAGE, Calif. -- May 02, 2013

Dole Food Company, Inc. (NYSE: DOLE) today announced financial and operating
results for the first quarter ended March 23, 2013. With the completed sale to
ITOCHU Corporation on April 1, 2013 for $1.685 billion in cash (subject to
certain adjustments), Dole’s former worldwide packaged foods and Asia fresh
businesses have been separated from and are no longer part of Dole, and are
reported as discontinued operations. Dole continues as an international
commodity produce company with inherently more volatile earnings on a smaller
footprint, retaining its fresh vegetables business and remaining fresh fruit
business. Dole reported the financial and operating results of its continuing
fresh produce businesses, and provided updated guidance for the second quarter
and fiscal year 2013. Dole also provided an update on its new capital
structure.

For the first quarter of 2013, Adjusted EBITDA from continuing operations was
$34 million (excluding the one-time charge discussed below, Adjusted EBITDA
would have been $68 million) compared to $44 million in the first quarter of
2012. Comparable Income from continuing operations for the first quarter of
2013 was $11 million or $0.12 per share, compared with $22 million, or $0.24
per share in the first quarter of 2012. Income from continuing operations for
the first quarter of 2013 was $4 million or $0.04 per share, compared with $26
million, or $0.29 in the first quarter of 2012 (see Exhibit 3).

Dole’s first quarter 2013 Adjusted EBITDA from continuing operations reflected
an additional $34 million charge to fully provide for the previously announced
EU General Court antitrust decision. “Compared with 2012, excluding this
amount, Adjusted EBITDA improved to $68 million from $44 million for Dole’s
continuing operations. Dole’s first quarter performance is in line with our
full-year expectations for 2013, at the low end of the guidance range of
$150–$170 million,” said C. Michael Carter, Dole’s President and Chief
Operating Officer. “First quarter Adjusted EBITDA from both of our remaining
lines of business exceeded last year. Earnings grew in all of our core fresh
fruit product lines. Fresh vegetables performance improved largely due to a
turn-around in the fresh-packed product line.”

Dole updated its guidance for the 2013 second quarter and full fiscal year.
“There is volatility in earnings from both of our fresh produce businesses, as
we are currently seeing in the swing from the first quarter to the second
quarter this year,” said Carter. “We expect second quarter Adjusted EBITDA to
approximate half of first quarter Adjusted EBITDA (excluding the $34 million
charge), with lower earnings from both our fresh fruit and fresh vegetables
businesses. This volatility is especially pronounced in our legacy strawberry
business, where we expect earnings to be down by $15–$20 million in the first
half of 2013, compared to 2012. During the last six months our strawberry
growing regions in California have experienced extreme warm weather followed
by unusual cold weather and now warm weather again. As for full year 2013, we
expect the overall lower earnings in the bananas and berries product lines to
put pressure on our expected Adjusted EBITDA at the low end of the guidance
range. The impact of higher expected volumes in these product lines is more
than offset by expected lower prices and higher costs.”

Dole recently completed the syndication of its new capital structure,
initially implemented in connection with the April 1^st sale. “Our upsized
capital structure, consisting of a $675 million term loan at LIBOR plus 2.75%
with a 1% LIBOR floor, and a $180 million revolver at LIBOR plus 2.75%,
provides needed flexibility to enhance shareholder value,” said Carter. The
proceeds from the April 1^st sale and our new capital structure were used to
pay off Dole’s previous indebtedness of approximately $1.7 billion, including
the settlement in full of capital lease obligations of approximately $50
million related to two vessels. After transaction-related taxes, costs and
expenses, the extinguishment of the long-term Japanese yen hedges of $25.1
million, the European Commission’s fine of €45.6 million, and the expected
resolution of the Honduras tax case, our net debt increases to approximately
$440 million, with a resulting net leverage ratio of approximately 2.9x (based
on Dole’s 2013 Adjusted EBITDA guidance).

“The new Dole is off to an extraordinary start in 2013, with the
record-setting early approval from China’s Ministry of Commerce resulting in
the timely completion of the sale of our worldwide packaged foods and Asia
fresh businesses to ITOCHU Corporation, for $1.685 billion cash,” said Carter.
“The timeliness of the cash proceeds from this large valuation transaction
enabled us to take advantage of optimal credit market conditions, resulting in
a more efficient, much lower-cost new capital structure. This new capital
structure allows us to resolve long-standing legacy exposures discussed above,
while also providing needed financial flexibility to enhance shareholder
value. We are very excited and very optimistic about the long-term future of
the new Dole and its prospects. Dole remains an industry leader in the
sourcing, distribution and marketing of bananas, pineapples and other tropical
and deciduous fruits, packaged salads, fresh-packed vegetables and fresh
berries. With our now more flexible capital structure and the eventual lower
cost structure from right-sizing our organization, Dole will be well
positioned to pursue growth opportunities.”

Selected Financial Data from Continuing Operations (Unaudited) (the two lines
of fresh produce business remaining with the new Dole)

                                            Quarter Ended
                                             March 23, 2013  March 24, 2012
                                             (In millions)
Revenues, net                                $  1,053.8       $    1,086.4
Operating income (loss)                         (0.1     )         28.4
Adjusted EBITDA from continuing operations      34.2               43.9
Comparable Income                               10.5               21.6

See “Non-GAAP Measurements” below for discussion of EBIT and Adjusted EBITDA.

Revenues from Continuing Operations (the two lines of fresh produce business
remaining with the new Dole):

Revenues decreased 3% to $1.05 billion during the quarter ended March 23,
2013. Excluding revenues from our former German ripening and distribution
subsidiary, which was sold during the first quarter of 2012, sales increased
8%. Fresh fruit revenues increased mainly due to higher sales of bananas and
other fresh fruits in Europe as a result of improved pricing, higher volumes,
and favorable euro and Swedish krona foreign currency exchange movements.
These factors were partially offset by lower pricing of bananas in North
America as well as lower volumes of pineapples in North America and Europe.
Fresh vegetables revenues increased 21%, primarily due to improved pricing for
fresh-packed vegetables, higher pricing and volumes in value-added and higher
volumes of berries.

Adjusted EBITDA from Continuing Operations (the two lines of fresh produce
business remaining with the new Dole):

Adjusted EBITDA decreased to $34 million in the first quarter of 2013 from $44
million in the prior year. Excluding legal provisions of $34 million related
to the European Union General Court decision, Adjusted EBITDA increased $24
million. Fresh fruit Adjusted EBITDA increased due to higher earnings from
bananas, pineapples and Chilean deciduous fruit. Banana earnings benefitted
from improved pricing in Europe as well as lower Latin America fruit costs and
lower shipping costs. Fresh vegetables Adjusted EBITDA increased due to higher
pricing in the fresh-packed vegetables business, partially offset by lower
earnings in the value-added and berries businesses due mainly to higher
vegetable and production costs and higher growing costs for strawberries.

Segment Information from Continuing Operations (Unaudited) (the two lines of
fresh produce business remaining with the new Dole):

                                              Quarter Ended
                                               March 23, 2013  March 24, 2012
Revenues from external customers               (In millions)
Fresh fruit                                    $  763.8         $  847.6
Fresh vegetables                                  289.6            238.4
Corporate                                        0.4            0.4      
                                               $  1,053.8      $  1,086.4  
                                                                
                                                                
                                               March 23, 2013   March 24, 2012
EBIT                                           (In millions)
Fresh fruit EBIT                               $  11.5          $  35.7
Fresh vegetables EBIT                            17.0           7.0      
Total operating segments                          28.5             42.7
Corporate:
Unrealized gain (loss) on foreign                 4.0              3.6
denominated instruments
Share-based compensation                          (6.1     )       (1.7     )
ITOCHU related transaction costs                  (7.1     )       (0.2     )
Operating and other expenses, net                (9.1     )      (11.5    )
Total Corporate                                  (18.3    )      (9.8     )
Total EBIT before discontinued operations      $  10.2         $  32.9     

See Exhibit 2 for further detailed information on segments.

Cash and Debt (Unaudited)

                                 March 23, 2013  December 29, 2012
Cash:                              (In millions)
Cash and cash equivalents          $    101.1       $     91.6
Total Debt:
Revolving credit facility          $    75.3        $     119.2
Term loan facilities                    865.5             867.7
Senior Notes and Debentures             644.9             644.9
Other debt, net of debt discount       53.8             62.4
Total Debt                         $    1,639.5     $     1,694.2
Net Debt                           $    1,538.4     $     1,602.6
                                                          

Conference Call

The company will hold a conference call for investors to discuss its first
quarter results, new capital structure and share repurchase program at 4:45
p.m. ET today. Access to a live audio webcast is available at
http://investors.dole.com under “Webcasts.” Toll-free telephone access will be
available by dialing 1-877-703-6104 in the United States and 1-857-244-7303
from international locations and providing the conference code 531816615. A
replay of the call will be available until May 9, 2013. To access the
telephone replay, dial 1-888-286-8010 from the United States and 617-801-6888
from international locations and enter the confirmation code 52114093. A
replay of the webcast will be archived and available on www.dole.com.

Guidance

Dole has provided earnings guidance to give investors general information on
the overall direction of its remaining businesses following the sale
transaction. The guidance provided is subject to numerous uncertainties,
including, among others, overall economic and capital-market conditions and
the markets for fresh fruits and vegetables. Dole does not intend, and
undertakes no obligation, to update its forward-looking statements, including
projections and future prospects.

Non-GAAP Measurements

Earnings before interest, taxes and discontinued operations (“EBIT before
discontinued operations”), Adjusted EBITDA from continuing operations and
Comparable Income from continuing operations (total and per share) are
measures commonly used by financial analysts in evaluating the performance of
companies. EBIT before discontinued operations is calculated from net income
by adding interest expense and income tax expense, and adding the loss or
subtracting the income from discontinued operations, net of income taxes.
Adjusted EBITDA from continuing operations is calculated from EBIT before
discontinued operations by: adding depreciation and amortization from
continuing operations; adding the net unrealized loss or subtracting the net
unrealized gain on foreign currency and bunker fuel hedges from continuing
operations; adding the foreign currency loss or subtracting the foreign
currency gain on the vessel obligations; adding the net unrealized loss or
subtracting the net unrealized gain on foreign denominated instruments from
continuing operations; adding share-based compensation expense from continuing
operations; adding charges for restructuring and long-term receivables from
continuing operations; adding ITOCHU transaction related costs; and
subtracting the gain on asset sales. Comparable Income from continuing
operations is calculated from income from continuing operations by: adding
charges for restructuring and long-term receivables, net of income taxes;
adding the net unrealized loss or subtracting the net unrealized gain on
foreign currency and bunker fuel hedges, net of income taxes; adding the
foreign currency loss or subtracting the foreign currency gain on the vessel
obligations, net of income taxes; adding the net unrealized loss or
subtracting the net unrealized gain on foreign denominated instruments, net of
income taxes; adding share-based compensation expense, net of income taxes;
adding ITOCHU transaction related costs, net of income taxes; and subtracting
the gain on asset sales, net of income taxes. These items have been adjusted
because management excludes these amounts when evaluating the performance of
Dole. Net debt is calculated as total debt less cash.

EBIT before discontinued operations, Adjusted EBITDA from continuing
operations and Comparable Income from continuing operations (total and per
share) are not calculated or presented in accordance with U.S. GAAP and are
not a substitute for net income attributable to Dole Food Company, Inc., net
income, income from continuing operations, cash flows from operating
activities or any other measure prescribed by U.S. GAAP. Further, EBIT before
discontinued operations, Adjusted EBITDA from continuing operations and
Comparable Income from continuing operations (total and per share) as used
herein are not necessarily comparable to similarly titled measures of other
companies. However, Dole has included these three measures herein because
management believes that they are useful performance measures for Dole and for
securities analysts, investors and others in the evaluation of Dole.

About Dole Food Company, Inc.

Dole Food Company, with 2012 revenues of $4.2 billion, is one of the world’s
largest producers and marketers of high-quality fresh fruit and fresh
vegetables. Dole is an industry leader in many of the products it sells, as
well as in nutrition education and research. For more information, please
visit www.dole.com or http://investors.dole.com.

Forward-Looking Statements

This release contains “forward-looking statements,” within the meaning of the
Private Securities Litigation Reform Act of 1995, that involve a number of
risks and uncertainties. Forward-looking statements, which are based on
management’s current expectations, are generally identifiable by the use of
terms such as “may,” “will,” “expects,” “believes,” “intends,” “anticipates”
and similar expressions. The potential risks and uncertainties that could
cause actual results to differ materially from those expressed or implied
herein include weather-related phenomena; market responses to industry volume
pressures; product and raw materials supplies and pricing; energy supply and
pricing; changes in interest and currency exchange rates; economic crises and
security risks in developing countries; international conflict; and quotas,
tariffs and other governmental actions. Further information on the factors
that could affect Dole’s financial results is included in its SEC filings,
including its Annual Report on Form 10-K.

Exhibit 1 - Reconciliation of Net income (loss) to EBIT before discontinued
operations and Adjusted EBITDA from continuing operations

                                              Quarter Ended
                                               March 23, 2013  March 24, 2012
                                               (In millions)
Net income (loss)                              $   (65.6   )    $   17.2
Loss from discontinued operations, net             69.5             8.4
Interest expense from continuing ops.              10.2             2.1
Income taxes from continuing ops.                 (3.9    )       5.2    
EBIT before discontinued operations                10.2             32.9
Depreciation and amortization from                 15.1             15.2
continuing ops.
Net unrealized (gain) loss on derivative           1.1              (1.5   )
instruments from continuing ops.
Foreign currency (gain) loss on vessel             (3.1    )        1.4
obligations
Net unrealized (gain) loss on foreign              (4.1    )        (3.8   )
denominated instruments from continuing ops.
Share-based compensation from continuing           9.2              2.4
ops.
Charges for restructuring from continuing          -                1.3
ops.
ITOCHU transaction related costs                   7.1              0.2
Gain on asset sales                               (1.3    )       (4.2   )
Adjusted EBITDA                                $   34.2        $   43.9   
                                                                           

Exhibit 2 (Unaudited) – Items eliminated to calculate adjusted EBITDA from
continuing operations

EBIT was impacted by charges for restructuring and long-term receivables,
unrealized foreign currency exchange gains and losses, unrealized gains
(losses) on fuel hedges, share-based compensation, ITOCHU transaction related
costs, and gain on asset sales, which are detailed in the tables below. These
items are eliminated for purposes of calculating Adjusted EBITDA from
continuing operations.

                                              Quarter Ended
                                              March 23, 2013  March 24, 2012
Fresh Fruit                                    (In millions)
                                                                
Charges for restructuring                      $   -            $   (1.3   )
Unrealized gain (loss) on foreign currency         (1.1   )         1.5
and fuel hedges
Foreign currency exchange gain (loss) on           3.1              (1.4   )
vessel obligations
Net unrealized gain on foreign denominated         0.1              0.2
instruments
Share-based compensation                           (2.3   )         (0.5   )
Gain on asset sales                               1.3            4.2    
Total                                          $   1.1         $   2.7    
                                                                
                                                                
                                               Quarter Ended
                                              March 23, 2013   March 24, 2012
Fresh Vegetables                               (In millions)
                                                                
Share-based compensation                       $   (0.8   )     $   (0.2   )
Total                                          $   (0.8   )     $   (0.2   )
                                                                
                                                                
                                               Quarter Ended
                                              March 23, 2013   March 24, 2012
Corporate                                      (In millions)
                                                                
Net unrealized gain (loss) on foreign          $   4.0          $   3.6
denominated instruments
Share-based compensation                           (6.1   )         (1.7   )
ITOCHU transaction related costs                  (7.1   )        (0.2   )
Total                                          $   (9.2   )     $   1.7    
                                                                

Exhibit 3 - Reconciliation of Income (loss) from continuing operations to
Comparable Income from continuing operations (Unaudited):

                                                       
                                   Quarter Ended
                                   March 23, 2013        March 24, 2012
                                   (In millions, except per share data)
                                             Earnings              Earnings
                                              per share              per share
Income from continuing             $ 3.9      $ 0.04      $ 25.6     $ 0.29
operations
Net unrealized (gain) loss on
derivative instruments, net of     1.0        0.01        (1.0   )     (0.01 )
income taxes of $(0.1) million
and $0.5 million
Charges for restructuring, net     -          -           1.3          0.01
of income taxes^1
Foreign currency exchange loss
on vessel obligations, net of      (3.1   )   (0.03   )   1.4          0.01
income taxes^1
Net unrealized (gain) loss on
foreign denominated instruments,   (4.0   )   (0.05   )   (3.7   )     (0.04 )
net of income taxes of $0
million and $0.1 million
Share-based compensation, net of
income taxes of $(2.9) million     6.3        0.07        1.6          0.02
and $(0.8) million
ITOCHU transaction related
costs, net of income taxes of      7.7        0.09        0.2          -
$0.7 million and $0
Gain on asset sales, net of
income taxes of $0 million and     (1.3   )   (0.01   )   (3.8   )    (0.04 )
$0.3 million
Comparable Income from             $ 10.5    $ 0.12     $ 21.6    $ 0.24  
continuing operations

^1 There was no income tax impact for this reconciling item.

Contact:

Dole Food Company, Inc.
Beth Potillo, (818) 879-6733
 
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