dole 1996 annual

D o l e F o o d C o m pa n y, I n c .3 1 3 6 5 O a k C r e s t D r i v e , We s t l a k e V i l l a g e , C a l i f o r n i a 9 1 3 6 1

D o l e F o o d C o m pa n y, I n c .A n n u a l R e p o r t

R2/COVER2PRINT 11/10/98 5:16 PM

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, strin-

gent quality control measures, state-of-the-art production

and transportation technologies, continuous improvement

through research and innovation, dedication to the safety of

our employees, and communities and the environment.

C O M P A N Y A N D S H A R E H O L D E R I N F O R M A T I O N

THE COMPANY

Founded in Hawaii in 1851, Dole FoodCompany, Inc. is the world’s largest producer and marketer of fresh fruit and vegetables, and markets a growing line of packaged foods. The Company does business in more than 90 countries and employs approximately 46,000 full-time people.

CORPORATE HEADQUARTERS

31365 Oak Crest DriveWestlake Village, CA 91361(818) 879-6600

AUDITORS

Arthur Andersen LLP633 West Fifth StreetLos Angeles, CA 90071

SECURITIES TRANSFER AND DIVIDEND

DISBURSEMENT AGENT

The First National Bank of BostonP.O. Box 644Boston, MA 02102(800) 733-5001

DIVIDEND REINVESTMENT PLAN

A cash dividend of $0.10 per common share was declared in each quarter of 1996for a total annual dividend of $0.40 pershare. Dole Food Company, Inc. does nothave a dividend reinvestment plan.

INVESTMENT INDUSTRY INQUIRIES

Members of the investment industry should direct inquiries to:Office of the TreasurerDole Food Company, Inc.31365 Oak Crest DriveWestlake Village, CA 91361(818) 879-6600

ADDITIONAL INFORMATION REQUESTS

For Annual Reports and Forms 10-K, please contact:Office of the Corporate SecretaryDole Food Company, Inc.31365 Oak Crest DriveWestlake Village, CA 91361Telephone (818) 879-6814Facsimile (818) 879-6615Dole’s Annual Report is available on theinternet at http://www.dole.com

STOCK EXCHANGE

Dole Food Company, Inc.’s common stock (DOL) is traded on the New York and Pacific Stock Exchanges.

INTERNET ADDRESS:http://www.dole.comhttp://www.dole5aday.com

Dole® is a registered trademark of Dole Food Company, Inc.

© 1997 Dole Food Company, Inc.All rights reserved.

R2/COVER2PRINT 11/10/98 5:16 PM

d o l e f o o d c o m pa n y, i n c . P a g e

92 93 94 95 96

R E V E N U E

(in millions)

92 93 94 95 96

O P E R AT I N G I N C O M E

(in millions)

3,12

0

3,10

8 3,49

9 3,80

4

3,84

0

175

166

138

193

214

1,00

1

1,05

2

1,08

1

508 55

0

6.5% 7.

6%

6.4%

16.0

%

24.6

%

92 93 94 95 96

C O M M O N S H A R E H O L D E R S ’E Q U I T Y

(in millions)

92 93 94 95 96

R E T U R N O N E Q U I T Y

(in percent)

(in millions, except per share data) 1996 1995 1994 1993 1992

Revenue $3,840 $3,804 $3,499 $3,108 $3,120

Income from continuing operations before cumulative effect of accounting change $ 89 $ ,120 $ , 58 $ 62 $ 66

Discontinued operations – (97) 10 16 (2) Cumulative effect of accounting change – – – – (48)

Net income $ 89 $ 23 $ 68 $ 78 $ 16

Earnings per common share Income from continuing operations before

cumulative effect of accounting change $ 1.47 $ 2.00 $ .98 $ 1.04 $ 1.11Discontinued operations – (1.61) .16 .26 (.04) Cumulative effect of accounting change – – – – (.81)

Net income $ 1.47 $ .39 $ 1.14 $ 1.30 $ .26 Average common shares outstanding 60 60 60 60 60

Total assets $2,487 $2,442 $3,685 $3,159 $2,926

Capitalization Short-term debt $ 22 $ ,24 $ , 54 $ , 79 $ , 81 Long-term debt 904 896 1,555 1,111 950 Minority interests 30 26 25 39 35 Common shareholders’ equity 550 508 1,081 1,052 1,001

Total $1,506 $1,454 $2,715 $2,281 $2,067

Book value per common share $ 9.18 $ 8.49 $18.17 $17.70 $16.85 Common stock price at year-end $34.00 $35.00 $23.00 $26.75 $32.13Market price range

High $ 431⁄2 $ 38 $ 351⁄2 $ 377⁄8 $ 40 Low $ 327⁄8 $ 24 $ 221⁄2 $ 257⁄8 $ 26

Annual cash dividends per common share $ .40 $ .40 $ .40 $ .40 $ .40

Note: Income from continuing operations for 1996, 1993 and 1992 includes pre-tax restructuring charges of $50 million, $43 million and $42 million, respectively.Income from continuing operations for 1995 includes a pre-tax gain of $62 million related to assets sold or held for sale. The real estate and resorts business distributedto shareholders in 1995 has been presented throughout this report as discontinued operations.

F I N A N C I A L H I G H L I G H T S

R3/Front 3/14 11/10/98 4:57 PM

Dole concentrated on creating shareholder value by focusing management efforts on

increasing the return on assets employed.These efforts included:

■ Accelerating the growth of its core businesses where Dole has definite competen-

cies, competitive advantages, and high existing returns.

■ Leveraging its global shipping and distribution infrastructure to carry more prod-

ucts with marginal incremental costs.

■ Joint venturing with partners to mutually benefit from the synergies of combined

strengths.

■ Downsizing or liquidating operations that do not meet minimum return on

investment criteria.

■ Selling assets that are either nonproductive or do not produce adequate returns.

Concurrently, Dole has shifted its management emphasis from the supply side to the

market side of the business, in order to differentiate itself and meet the unique

requirements of retail chains and consumers in the various regions of the world

served by Dole.

The sum total of these efforts positions Dole to grow its businesses profitably into the

future, reduce debt,and generate cash flow to be used for the further expansion of Dole.

E X PA N S I O N Dole took a number of steps to grow its core businesses in 1996.

Early in the year, Dole acquired Pascual Hermanos, the largest fruit and vegetable

grower in Spain. Pascual is the largest supplier of iceberg lettuce to the European

continent and, therefore, a strategic acquisition to position Dole to expand its suc-

cessful North American salad business into Europe.

Dole also entered into a joint venture in Norway with the BAMA Group to build

its first European salad plant for the Norwegian market. This plant was built and

entered into production in 1996, and Dole salads quickly gained the leading market

share in Norway.

During the year, Dole also continued the strategic expansion of its distribution net-

works in Europe and Japan. Dole distribution centers now carry an increasing per-

centage of Dole’s total sales in Europe and Japan and offer strategic advantages for


T O O U R S H A R E H O L D E R S

Dole celebrated its 145th anniversary in 1996 with a revitalized spirit and

direction. Following the spin-off of its extensive real

estate assets to shareholders in December of 1995, Dole has

singularly focused on building its global food business into one of the

premier food companies of the world.

R3/Front 3/14 11/10/98 4:57 PM


Board of Directors

(Seated – Left to Right)

Elaine L. Chao and David H. Murdock

(Standing – Left to Right)

Richard M. Ferry, Zoltan Merszei, James

F. Gary, Mike Curb, David A. DeLorenzo

logistical consolidation as well as closer relationships with customers in these coun-

tries. In December of 1996, Dole completed construction and inaugurated its largest

distribution facility in Tokyo, Japan. As the retail industry continues to consolidate,

Dole’s distribution centers, category management efforts, and supply partnerships

continue to strengthen the Dole market position globally.

To leverage its infrastructure and create additional synergies, Dole entered into a joint

venture marketing program with the prestigious Langeberg Foods of South Africa to

market its supply of canned deciduous fruit in Europe that uniquely complement

Dole’s canned pineapple sales on the continent and in the United Kingdom.

Dole also completed the acquisition of Fyffes PLC’s Guatemalan operations and

entered into a shipping agreement to supply the seller part of its European banana

market requirements. This transaction provided an opportunity to expand Dole’s

North American operations as well as improve production and shipping economies

of scale.

M A X I M I Z I N G R E T U R N S While growing its core businesses, Dole is concen-

trating on downsizing or liquidating businesses or assets that have not provided ade-

quate returns. Dole continued its program of an orderly liquidation of its North

American agricultural lands, and announced in December 1996 the restructuring

and liquidation of its dried fruit business in North America.

As a result of the significant reduction in debt, Dole entered into a new $600 million

five-year revolving credit facility, which replaces its former $1 billion credit facility.

Agents in the new facility are Chase Manhattan Bank, Bank of America and Citibank.

R3/Front 3/14 11/10/98 4:57 PM

e Officer

To increase shareholder value, Dole also announced a program providing for the

repurchase of up to five percent of its outstanding common shares. Shares will be

repurchased from time to time based on prevailing market conditions.

N U T R I T I O N E D U C AT I O N Dole proudly produces nutritious, wholesome

products that enable consumers to lead a healthier lifestyle. Dedicated to increasing

consumer knowledge on the benefits of good nutrition, Dole’s mission is to encour-

age people to eat at least five servings of fruits and vegetables a day. Much of Dole’s

nutritional educational resources are focused on children. The “5 A Day

Adventures,” a nutrition education CD-ROM, teaches children to eat five servings

of fruits and vegetables a day and is available free to schools.This interactive tool is

now in use in more than 32,000 schools nationwide.

Dole is expanding in the area of nutritional education by underwriting a study in

collaboration with nutrition experts at University of California, Los Angeles and

Mayo Clinic to ascertain and assemble the nutritional values of various foods. In

conjunction with this project, Dole is undertaking the compilation of a nutritional

encyclopedia to designate proper consumption of fruits, vegetables, grains, nuts and

protein. Eventually the information will be disseminated to customers, consumers,

and the general public to promote nutritional awareness to create a healthier society.

Dole continues to see excellent prospects for growth. The developing markets in

Europe, Asia and Latin America, where per capita consumption of bananas and

pineapples is still low, offer opportunities for continued market expansion.

Introductions of new products, such as Dole’s expanding salad lines and new fruit

cups, offer excellent growth potential both domestically and internationally. Joint

ventures with supply partners, which leverage shipping and distribution assets, con-

tinue to offer Dole attractive possibilities for sound economic growth.

I am also very pleased with the depth and experience of our entire management

team. Dole has a multi-cultural reservoir of talent which is its most valuable

resource. This exceptional workforce enables Dole to successfully grow the Dole

brand across the globe.

We wish to thank our employees, shareholders and customers for their continued

support and confidence.

Sincerely,

David H. Murdock

Chairman and Chief Executiv


EUROPE AND AFRICA

BelgiumCameroonCanary IslandsFranceGermanyGhanaGreeceItalyIvory CoastNetherlandsSomaliaSouth AfricaSpainTunisiaTurkeyUnited Kingdom

LATIN AMERICA AND

CARIBBEAN

ArgentinaChileColombiaCosta RicaDominican RepublicEcuadorGuadeloupeGuatemalaHondurasJamaicaMartiniqueMexico

NicaraguaPanamaPeruVenezuelaWindward Islands

ASIA

AustraliaChinaJapanNew ZealandPhilippinesThailand

NORTH AMERICA

CanadaUnited States

ArizonaCaliforniaFloridaHawaiiWashington

EUROPE AND

MIDDLE EAST

AlbaniaAlgeriaAustriaAzerbaijanBahrianBelarussiaBelgiumBosniaBulgariaCroatiaCzech RepublicDenmarkEstoniaEgyptFinlandFranceGermanyGreeceHungaryIcelandIndiaIrelandItalyJordanKuwaitLatviaLebanonLithuaniaLuxembourgMalta

MoroccoNetherlandsNorwayOmanPolandPortugalQatarRomaniaRussiaSaudia ArabiaSenegalSlovakiaSpainSwedenSwitzerlandSyriaTunisiaTurkeyUkraineUnited Arab EmiratesUnited KingdomUzbekistan

LATIN AMERICA AND

CARIBBEAN

ArgentinaBahamasBarbadosBermudaBrazilChileColombia

Costa RicaDominican RepublicEcuadorGuadeloupeGuatemalaHondurasJamaicaMartiniqueMexicoNetherlands-AntillesPanamaPeruTrinidad & TobagoUruguayVenezuela

ASIA

AustraliaChinaHong KongIndonesiaJapanMalaysiaNew ZealandPhilippinesSingaporeSouth KoreaTaiwanThailand

NORTH AMERICA

CanadaUnited States

■ Sourcing

▲ Ripening/Distribution

● Markets

★ Corporate

D O L E W O R L D W I D E O P E R A T I O N S

FOOD OPERATING DIVISIONS AND LOCATIONS FOOD MARKETING DIVISIONS AND LOCATIONS

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R3/Front 3/14 11/10/98 3:02 PM


Dole North America generated $1.8 billion of 1996 revenue of which 28

percent was sourced in Latin America, 16 percent from

the Far East and 56 percent from within North America.

These operations include the distribution, marketing and

sales of bananas sourced in Latin America, deciduous fruit

sourced in Chile, and pineapple and canned fruit products

sourced in Asia. Also included are citrus, deciduous fruits and

vegetables procured locally and sold primarily in the North

American market. This sourcing diversification provides Dole with a

year-round supply of a wide array of fruit and vegetable products.

D o l e

N o r t h A m e r i c a

V E G E TA B L E S The fresh vegetable market in North America is a $25 billion

business sourced from a large number of regional suppliers, most of which offer

limited product selection and seasonal supplies.Dole’s strategy is to offer a wide range

of products year-round to provide retailers an efficient, dependable source of supply.

As the retail food chains continue to consolidate, Dole believes its strategy will attract

an increasing percentage of food chains as retailers seek fewer suppliers that consistent-

ly offer quality, dependable supply and efficient logistical support.A continuing focus

on the marketing and customer service aspects of the business distinguish Dole in the

market place and builds long-term, brand based relationships with its customers.

Fresh cut salads and packaged vegetable assortments continue to increase market

share in North America reaching an estimated eight percent of total vegetable sales

in 1996, or $2 billion, a 22 percent increase over 1995. Dole’s growth in the value

added market in 1996 exceeded the overall market growth. Dole continued to be a

leader in fresh cut salads by pioneering an entirely new fresh cut segment, the single

serve salads. Dole Lunch For One, introduced to supermarkets in early 1996,

includes a single portion, complete salad and bread accompaniment.The product is

David H. MurdockChairman and Chief Executive Officer

David A. DeLorenzoPresident and Chief Operating Officer

The complementary winter

and summer growing seasons

of Monterey, California and

Yuma,Arizona offer year-

round production for Dole’s

value added salad and

vegetable business, the

fastest growing segment in

the grocery store today.

R3/Front 3/14 11/10/98 3:02 PM

F RE S Hy e a r - r o u n d

F RE S Hy e a r - r o u n d

R3/Front 3/14 11/10/98 3:03 PM

A DVA N C E Dt e c h n o l o g y

A DVA N C E Dt e c h n o l o g y

R3/Front 3/14 11/10/98 3:04 PM

designed for the consumer who wants a healthy, quick lunch. Dole Lunch For One

is the top selling single serve salad and consumers confirm it as the most nutritious,

convenient and the best value on the market today.

Dole’s distribution system and customer service continue to expand and improve.

The highly automated cooler in Marina, California affords customers the quickest

and most accurate truck pick-up in the produce industry. In addition to distribut-

ing products from Soledad, California,Yuma, Arizona and New York City, Dole’s

national distribution system was further enhanced in 1996 by distributing products

from Bolingbrook, Illinois (a Chicago suburb) and Atlanta, Georgia. To further

Dole’s penetration of the Eastern markets, a third state-of-the-art processing plant

will be built in Ohio in 1997.When this plant is functional in 1998, it will reduce

the response and lead time for buyers in the East to one or two days. Dole contin-

ues to be on the leading edge of providing retailers assistance in managing their busi-

nesses.A comprehensive category management program has been developed to help

retailers better manage produce inventories and space in the supermarket.As another

service to the retailer, Dole is providing an in-store merchandising system to enable

retailers to better organize sections for easier shopping and customer convenience.

F R E S H F RU I T The fresh fruit division supplies Dole retail customers with a

dependable source of high quality fruit on a year-round basis. Core fruit products

— bananas, apples, oranges, grapes, pears, stonefruit, pineapples and specialty items

such as melons and kiwis — are those most in demand by consumers. Products are

sourced throughout the Americas to ensure that selections are available throughout

all the North American seasons.This not only reduces seasonal fluctuation in sales

but permits sales personnel to be in contact with retail store buyers year-round

maintaining relationships and enhancing customer service capacity.

Focusing more on the customer service aspect of the business, Dole is downsizing its

investment in agricultural properties. By concentrating resources on processing and

distribution,Dole believes it can deliver greater value to both its customers and share-

holders. This customer service orientation includes a 100 percent containerized

banana delivery capacity, establishing strong long-term relationships with customers,

cross marketing various product offerings and investing in processing technology that

permits optimal sorting and storage of products to enable products to retain freshness.


Innovative in-field harvest-

ing and state-of-the-art

packing plants satisfy

rapidly growing consumer

demand for convenient sal-

ads and vegetables. More

than 25% of American

consumers eat fresh salads

from a bag.

Dole’s recently developed

fresh cut rack in-store

merchandising system

allows value added bagged

produce to be organized

and displayed prominently

and attractively to consumers.

Fresh, sliced, cubed,

crushed or chunked, Dole

pineapple has been a

worldwide bestseller for

decades.

R3/Front 3/14 11/10/98 3:04 PM

PAC K AG E D F RU I T Dole continues to enjoy strong market preference for its tra-

ditional canned pineapple products as well as for its tropical fruit salads. Through

marketing and packaging innovation, traditional Dole products are enjoying increas-

ing market share by meeting the specific needs of particular customers.This contin-

uing emphasis on customer service is a key to Dole’s success in growing market

share while maintaining good financial returns.

Market share for the holiday periods approached near record levels of 50 percent on

both pineapple and juice. Two major consumer promotions in conjunction with

American Hawaiian Cruise Lines at Easter and a joint promotion with Microsoft for

the holiday season generated large displays of canned pineapple, pineapple juice and

tropical fruit salad in grocery stores, drug stores and mass merchandisers.

Following its successful debut in Europe, Dole Pineapple Chunks and Tropical Fruit

Salads, packaged in clear plastic cups, are presently being test marketed on retail

shelves in Seattle and Portland.This new method of packaging fresh fruit is designed

to satisfy the consumer’s need for safe, healthy and convenient snacks. Additional

fruit items will be added in 1997.

Dole Pizza Tidbits were introduced nationally in 1996 and have become a hit with

pizza parlor operators. Processed pineapple continues to have significant growth

opportunities in the area of sandwich toppings, salad bars and as an ingredient for

Asian cooking.The combination of a strong base business coupled with new prod-

ucts drove volume and earnings to historical highs in 1996.


Gregory L. Costley,President – Dole North America Fruit

Fresh fruit is sourced from

California, Florida, Hawaii,

Washington, and through

the jet-fresh program in

Chile. Dole boasts the

largest fully integrated

citrus organization in

North America with pro-

duction from over 30,000

acres of prime farmland.

Dole is also the continent’s

leading supplier of table

grapes.

Dole apples enjoy a consis-

tently high rank in Asia

where uniform color, shape

and crispiness are the

critical factors for success.

In Hong Kong, Dole

controls 15 percent of the

apple market.

Lawrence A. Kern,President – Dole Fresh Vegetables

Peter M. NolanPresident – Dole Packaged Foods

R3/Front 3/14 11/10/98 3:05 PM


Q UA L I T Yv a r i e t y

Q UA L I T Yv a r i e t y

R3/Front 3/14 11/10/98 3:44 PM


Dole Latin America production and exports grew to 137.5 million boxes

during 1996, produced in its traditional South and

Central American operations as well as in certain Caribbean

countries. Bananas, pineapples, grapes, apples, pears, kiwis,

stonefruit, mangos and melons are shipped in modern refrigerated

vessels not only to North America,Western and Eastern Europe, but

also to the Mid- and Far-Eastern markets.

I N C R E A S E D P RO D U C T I O N Despite very adverse climatic conditions in Central

America associated with excessive rainfall in 1996, Dole was able to increase its own

banana production as well as that from associate growers. More than 21,000 Dole

employees take excellent care of all products produced on company-owned farms,

constantly striving for higher yields, better quality and lower costs. In countries

where Dole does not control production, it assists independent growers to success-

fully improve productivity and the quality of crops, enabling Dole to maintain the

highest standard of the industry in the countries in which it operates. A team of

highly skilled agronomists and other technical personnel in each country help to

achieve desired results and maintain high standards. Dole programs addressing

environmental concerns and worker safety lead the industry in all countries in

which it operates.

N E W M A R K E T S While the total Latin America banana production increased

approximately 3.5 percent in 1996, Dole’s production and sourcing of bananas was

up 10 percent versus 1995.This additional production was principally used to serve

new markets, primarily in Eastern Europe. Dole’s ability to remain a low cost producer

is a key factor in its success in the sales and marketing of increased banana volumes.

North America continues to be Dole’s largest banana market, but remarkable growth

has taken place in Russia where a regular shipping program into St. Petersburg com-

D o l e

L a t i n A m e r i c a

Dole supplies its customers

year-round through its

extensive sourcing capabili-

ties in Latin America.

Dole’s refrigerated container

shipping fleet, the world’s

largest, rapidly delivers

produce to global markets.

Juergen SchumacherPresident – Dole Latin America

Roberto ZacariasPresident – Dole Honduran Beverage

R3/Front 3/14 11/10/98 3:44 PM


WORLDWIDEd i s t r i b u t i o n

WORLDWIDEd i s t r i b u t i o n

R3/Front 3/14 11/10/98 3:46 PM

P RE M I E Rg r o w e r

P RE M I E Rg r o w e r

R3/Front 3/14 11/10/98 3:47 PM


Chilean grapes, nectarines,

peaches, plums, apples, and

more, are available from early

December through April.

menced in 1995.Today, Dole is the dominant brand sold in Russia with deliveries

through the Baltic and Black Sea ports. In addition, during 1996 the Chinese sig-

nificantly increased banana consumption with the support of Dole bananas shipped

both from Ecuador and the Philippines.

N U M B E R O N E I N C H I L E Dole Chile continued its exports of grapes, apples,

pears, stonefruit and kiwis at a record pace and remains Chile’s number one exporter

of fruits. Chile has soil and climate comparable to that of California’s fertile San

Joaquin Valley enabling it to provide the same quality and variety of fruit that

Americans have come to expect from North American growers. Located in the

Southern Hemisphere, Chile’s growing season is the exact opposite of the United

States. Produced under the same stringent quality controls and regulations, Dole

Chilean fruit permits the American consumer to enjoy summer fruit in the winter.

For 1997, Dole Latin America’s most important commitment is to continue improv-

ing fruit quality, customer service and maintain a low cost structure. Production of

bananas and other tropical fruits is expected to increase in order to participate in the

normal growth of the traditional markets as well as the many opportunities available

in the emerging new markets around the world.

H O N D U R A N B E V E R AG E O P E R AT I O N Dole’s majority-owned beverage

operation in Honduras continues to be a leading supplier of beverages, edible oils

and soap products. It is also the largest bottler and distributor of soft drink products

in Honduras, which has the highest per capita soft drink consumption in Central

America. The beverage operation is exclusively authorized to bottle Coca-Cola®,

Sprite® and Canada Dry® in Honduras.The Coca-Cola® brand, which has been bot-

tled for over 60 years, currently holds a soft drink market share approximately three

times as large as that of its nearest competitor. The beverage operation represents

approximately 75 percent of the Honduran soft drink market. Its distribution sys-

tem, which includes company-owned routes and independent distributors and

depots, allows it to distribute its products throughout the entire country.

Fresh bananas arriving

directly from the harvest

field are readied for clean-

ing, washing, inspection

and grading. Once packed,

they are shipped in refrig-

erated containers to prevent

ripening until they reach

market. Dole Latin

America sources bananas

from a well diversified per-

manent sourcing structure

transporting bananas from

Colombia, Costa Rica,

Ecuador, Guatemala,

Honduras, Nicaragua,

Panama, and Venezuela.

R3/Front 3/14 11/10/98 3:47 PM

Dole Asia continued its rapid expansion, with sales reaching $974 million

in 1996. Dole Asia produces its own products in the

Philippines, Thailand and China, and imports products into the

region from its affiliated divisions in the United States and Latin America.

P R E M I U M P RO D U C E R In Asia, Dole’s pineapple canneries in the Philippines and

Thailand lead the world in productivity, quality, sanitation and dedication to excel-

lence. Dole Philippines farms 25,000 acres on its plantations where pineapples are

grown and harvested at optimum color and ripeness to provide the best quality, fla-

vor and handling characteristics for fresh and processed requirements. Dole’s total

quality commitment is shared by its more than 6,000 employees who proudly pro-

duce, process, label and ship 100 percent of Dole’s high quality canned pineapple to

all of the world’s markets. Adhering to a tradition that started more than 110 years

ago, Dole is committed to maintaining the distinct quality of its canned pineapple.

Today’s employees are educated, dedicated, and devoted to keeping Dole pineapple

Number One in consumer satisfaction in the world.

While Japan remains Dole’s largest and most diversified Asian market, increasing

demand from Korea,Thailand, China, Singapore, the Philippines, and New Zealand

offers strong growth opportunities for the future. Despite a continued weak econo-

my in Japan in 1996, Dole products continue to benefit from the increasing demand

for imported foods into the Japanese market.

D I S T R I B U T I O N C E N T E R S In order to facilitate this trend in Japan, Dole has

created a nationwide infrastructure to efficiently process and distribute its increasing

volumes of imported goods. In 1996 Dole inaugurated its largest and most modern

facility in Tokyo which completes the first phase of Dole’s distribution network in

the major cities of Japan.These facilities allow for the efficient import, handling, pro-

cessing, packaging and delivery systems to meet Japanese consumer preferences and

retailer needs.Today, Dole centers are sprouting up all over Japan, offering banana


D o l e

A s i a

Paul CuyegkengPresident – Dole Asia

Dole’s pineapple opera-

tions are located in the

Southern Philippines just

above the equator.The

fields are situated on the

slopes of Mount Matutum

(7,550 Ft.) where weather

conditions provide a cool

year-round climate, ideal

for pineapple production.

R3/Front 3/14 11/10/98 3:47 PM

G L O B A Ls o u r c i n g

G L O B A Ls o u r c i n g

R3/Front 3/14 11/10/98 4:00 PM

L OW C O S Tp r o d u c e r

L OW C O S Tp r o d u c e r

R3/Front 3/14 11/10/98 4:01 PM

Dole’s pineapple cannery

in the Philippines is one of

the largest fruit canneries

in the world. Similar

canning operations in

Thailand produce processed

and fresh pineapple from

company-owned plantations

for shipping worldwide.


Dole Japan markets broccoli

and asparagus produced by

its affiliated divisions in

North America and the

Philippines.

ripening rooms, pineapple peeling centers and fresh produce repacking facilities

with operational efficiencies that deliver the lowest cost. In addition, all products

offered in this market meet Japanese requirements for premium sized, high quality

produce as well as packaged products that meet the taste preference of the Japanese

consumer. Many products initially developed for the Japanese market are easily

adaptable for the North American and European consumer. Dole recently contract-

ed nearly one thousand Japanese farmers to grow fruit and vegetables commencing

in the first few months of 1998.

D O L E F RU I T C A F É S To further capitalize on Japan’s growing taste for import-

ed foods, Dole has opened its first directly owned restaurant, the Dole Fruit Café in

the Shibuya district of Tokyo.

The southern European resort style cafés feature an upbeat ambiance and will have

a varied menu specializing in fresh juices, vegetables and fruits. Targeted to serve

young Japanese consumers, the lunch and dinner menus will feature new and unique

tropical fruit-accented dishes at reasonable prices. Plans to expand the Dole Cafés

include franchises as well as other directly owned Dole stores.

G ROW T H O P P O RT U N I T I E S The economy of the Philippines experienced a

continued resurgence in 1996 and Dole distribution facilities have grown to keep

pace with this market expansion. For years Dole has made significant investments in

pineapple, banana and vegetable production in the Philippines.This region is now

becoming a major market for its fresh vegetable and processed products, many devel-

oped especially for the Philippine consumer. Through its affiliate Quantum

Corporation, Dole efficiently distributes packaged foods and select amounts of fresh

products throughout the Philippines. Providing nationwide sales, marketing and

distribution service, Quantum boasts 100 percent penetration in the supermarket

and grocery channels.

As trade restraints in China,Taiwan and Korea decrease, these markets offer tremen-

dous growth potential as well as many challenges.To ensure success, Dole constantly

strives to understand local food and taste preferences, work with local distribution

operators and build a presence in markets that are both profitable and long lasting.

R3/Front 3/14 11/10/98 4:01 PM


Dole Europe reported record sales of $1 billion in 1996.This was achieved

through the expansion of sales in Europe, Ukraine,

Russia, Turkey, Syria and additional sales revenue from

successful joint ventures with Compagnie Fruitiere in France,

Jamaican Producer Fruit Distributors in the United Kingdom, and

Canary Islands Banana Producers.

F O RWA R D I N T E G R AT I O N Dole is one of the leading producers, marketers,

processors and distributors of high quality fruits and vegetables in Europe. Dole’s

European strategy has been to broaden its fresh fruit business and expand as a sup-

plier of processed fruit and vegetables. By growing its forward distribution network,

Dole is reducing overall distribution costs and developing lasting relationships direct-

ly with Europe’s major retail organizations. Until the early 1990’s, Dole imported

products solely through Germany and Italy. Now, Dole delivers fresh fruit and veg-

etable products through 20 ports throughout Europe to meet the ever increasing

demands of this region. Dole’s vast network of distribution centers services these

countries with 12 facilities in France, seven in Spain, four in Italy, three in the

United Kingdom, and one in Germany, all offering supermarkets a complete array

of products. Dole has also established a distribution center near Istanbul,Turkey to

service this country’s 60 million consumers.

S PA I N In 1996, Dole completed its acquisition of Pascual Hermanos, Spain, one of

the largest fruit and vegetable production companies in Europe. Pascual owns or

leases over 2,000 hectares of farms, production centers and packing houses. Pascual

grows, processes and packs over 90 percent of its vegetable exports which include

tomatoes and cherry tomatoes, lettuce, onions, and zucchini. It is also a major packer

and marketer of citrus, primarily purchased from independent growers.This acquisi-

tion provides Dole with a European source of vegetables and citrus products to fill

the demands generated by Dole’s marketing and distribution network throughout

D o l e

E u ro p e

William F. FeeneyPresident – Dole Europe

Andrew J. BilesExecutive Vice President – Dole Europe

Innovative technologies

developed in Dole’s canning

operations allow fresh fruit

to be packed into a small

plastic cup.This convenient

snack, already a success

in Europe and Asia, is

being test-marketed in

North America.

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P RO D U C Ti n n o v a t i o n

P RO D U C Ti n n o v a t i o n

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From planting through

harvesting, Dole bananas

are carefully nurtured and

undergo numerous quality

checks on Dole plantations.

Europe. Additionally, Pascual provides Dole with the production base to allow

entrance into the European value-added, prepared fresh salad category.

Agronomically, Spain is the California of Europe.The primary citrus and vegetable

production as well as large volume of deciduous products such as grapes, stonefruit

and exotics grown in Europe come from Spain. Entry into Spain, the fifth largest

European market, broadens Dole’s product line and increases its shelf-space in

supermarkets. Additionally, it will ensure year-round availability of Dole products

complementing those imported from Chile, Latin America and Florida.

N O RWAY Dole also entered into a joint-venture with BAMA Group, Norway’s

largest importer, marketer and distributor of fresh fruit and vegetables, forming

Dole-BAMA Fresh Salads. Capitalizing on its valued-added success in North

America, Dole Europe applied tested technological and marketing expertise to its

Norway joint venture. Incorporating the year-round production capabilities provid-

ed by the summers in Norway and the winters in Spain, Dole agricultural experts

from California assisted Norwegian farmers with production of specialty salads.

Construction of a state-of-the-art facility was initiated in January 1996. Production

commenced in July 1996 and the Dole-BAMA Group quickly became an estab-

lished market leader in Norway. The success of Dole-BAMA serves as a model for

the roll-out of Dole’s value-added salads throughout Europe.

A F R I C A In its joint venture with Compagnie Fruitiere, Dole extended its West

African shipping service and sourcing. In March 1996, the Cameroon shipping and

sourcing program was extended to the Ivory Coast and Ghana. Dole golden pineap-

ples, which are preferred by European consumers, are now being produced by joint

ventures in the Ivory Coast and traveling on Dole vessels to the European market.

With its alliance with Langeberg Food Limited of South Africa, Dole extended its

product line of deciduous canned fruit to include new single serve plastic cups.

The joint venture has provided Dole with products which enhance its marketing

programs to European supermarkets, complementing existing canned pineapple and

exotic fruit product lines.

Strategic acquisitions and

joint venture partnerships

have positioned Dole to

expand its successful

North American value

added salad business into

Europe.

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D O L E F O O D P R O D U C T S W O R L D W I D E :

DOLE FRESH FRUIT

Dole ApplesDole ApricotsDole BananasDole CherriesDole ClementinesDole CoconutsDole CranberriesDole GrapefruitDole GrapesDole Honeydew MelonDole KiwiDole LemonsDole LycheesDole MangosDole NectarinesDole OrangesDole PapayasDole PeachesDole PearsDole PersimmonsDole PineappleDole Pineapple Fresh-Cut BagsDole PlumsDole PomegranatesDole RaspberriesDole SatsumasDole StrawberriesDole TangelosDole Tangerines

DOLE FRESH VEGETABLES

Dole ArtichokesDole AsparagusDole Bell PeppersDole BroccoliDole Brussels SproutsDole CarrotsDole CauliflowerDole CeleryDole Baby LettuceDole Butter LettuceDole Green Leaf LettuceDole Iceberg LettuceDole Red Batavia LettuceDole Red Butter LettuceDole Red Leaf LettuceDole Romaine LettuceDole Green OnionsDole Spring OnionsDole Sugar PeasDole Idaho PotatoesDole RadishesDole Cherry TomatoesDole TomatoesDole Zucchini Squash

DOLE FRESH-CUT VEGETABLES

Dole Peeled-Mini CarrotsDole Shredded CarrotsDole Cole SlawDole Shredded LettuceDole Shredded Red CabbageDole Classic Iceberg SaladDole American Special Blend SaladDole European Special Blend Salad

Dole French Special Blend SaladDole Italian Special Blend SaladDole Romaine Special Blend SaladDole Complete Caesar SaladDole Complete Spinach/Bacon SaladDole Complete Oriental SaladDole Complete Sunflower Ranch SaladDole Complete Romano SaladDole Complete Caesar Salad

with Fat Free DressingDole Complete Herb Ranch Salad

with Fat Free DressingDole Complete Raspberry Romaine Salad

with Fat Free DressingDole Complete Zesty Italian Salad

with Fat Free DressingDole Caesar Lunch For OneDole Classic Ranch Lunch For OneDole Caesar with Fat Free Dressing Lunch For OneDole Italian with Fat Free Dressing Lunch For OneDole Family SaladDole Provence SaladDole Napoli SaladDole Spring Mix Special SaladDole Taco-Chips SaladDole Oriental Stir Fry VegetablesDole Wok Stir Fry Vegetables

DOLE DRIED FRUIT AND NUTS

Dole Blanched Slivered Almonds in Reclosable BagsDole Blanched Whole Almonds in Reclosable BagsDole Chopped Natural Almonds in Reclosable BagsDole Sliced Natural Almonds in Reclosable BagsDole Whole Natural Almonds in Reclosable BagsDole Roasted Almonds in Single Serve BagsDole Golden Seedless RaisinsDole Seedless Raisins CanisterDole Seedless Raisins CartonDole Seedless Raisins Mini SnacksDole Seedless Raisins Six PacksDole Seedless Raisins in Single Serve BagsDole Seedless Raisins in Reclosable BagsDole Chopped Dates CanisterDole Chopped Dates CartonDole Pitted Dates CanisterDole Pitted Dates CartonDole Chopped Dates CupDole Pitted Dates CupDole Whole Dates CupDole Pitted Dates Gelatin Mold CupDole Medjool DatesDole Date Nut RollDole Baking DatesDole California Style Trail Mix in Single Serve BagsDole Hawaiian Style Trail Mix in Single Serve BagsDole Breakfast Prunes in Reclosable BagsDole Large Prunes in Reclosable BagsDole Pitted Prunes CanisterDole Pitted Prunes CartonDole Pitted Prunes in Reclosable BagsDole Pistachio Kernels in Single Serve Bags

DROMEDARY

Dromedary Pitted Dates BagDromedary Chopped Dates BagDromedary Morsel Date Bag

Dromedary Pitted Dates CartonDromedary Chopped Dates Carton

SAMAN

Guyennoise Prunor Pitted PrunesGuyennoise Prunor Whole PrunesJA Whole DatesJA Whole PrunesWhole Deglet Nour DatesSoelia Dried ApricotsSoelia Dried FigsSoelia Blanched Whole AlmondsSoelia Sliced Thin AlmondsSoelia Whole PeanutsSoelia PistachiosSoelia Pitted PrunesSoelia Whole Prunes

DOLE PACKAGED FOODS

Dole Apricots in Juice or SyrupDole Apricot HalvesDole Apricot Snack CupDole Fruit Festival Snack CupDole Guava HalvesDole Orange Fruit Jelly CupsDole Peach HalvesDole Peach Snack CupDole Pear Snack CupDole Pineapple Chunks in Juice or SyrupDole Pineapple Snack CupDole Pineapple Select Fruit Cups in Fruit JuiceDole Pineapple Snack Wedges, Easy OpenDole Pineapple Tidbits in Juice or SyrupDole Crushed Pineapple in Juice or SyrupDole Pineapple & Peach CupsDole Pineapple & Papaya Fruit Jelly CupsDole Pineapple JuiceDole Pineapple Orange JuiceDole Pine-Orange Banana JuiceDole Pine-Orange Guava JuiceDole Pine-Passion Banana JuiceDole Pineapple Orange Juice BoxDole Pineapple Orange Banana Juice BoxDole Pineapple Orange Raspberry Juice BoxDole Pineapple Juice DrinkDole Pineapple Grapefruit Juice Dole Pineapple Pink Grapefruit DrinkDole Pineapple Lychee Juice DrinkDole Pineapple Orange Juice DrinkDole Pineapple Strawberry Juice DrinkDole Pineapple Slices in Juice or SyrupDole Mandarin Orange SegmentsDole Mandarin Orange Fruit CupsDole Papaya in SyrupDole Yellow Papaya ChunksDole Red Papaya Chunks in Light SyrupDole Pears in Juice and SyrupDole Peaches in Juice and SyrupDole Deciduous Fruit Cocktail in Juice

and SyrupDole Select Fruit Tropical Fruit Cups

in Fruit JuiceDole Tropical Fruit SaladDole Tropical Fruit Salad, Easy Open

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F I N A N C I A L H I G H L I G H T S

92 93 94 95 96G RO S S O P E R AT I N G

CA S H F L OW

(in millions)

■ Depreciation & Amortization (EBITDA)

■ Operating Income (EBIT)(a) Before restructuring charge

265 272

258

306 32

5

G ROW T H B Y R E G I O N

(in millions)

NorthAmerica

$641

LatinAmerica

$90

Asia$562

Europe$873

P E R C E N T O F TOTA L

G ROW T H B Y R E G I O N

92 93 94 95 96N E T D E B T

(in millions)

995

1,15

5

1,56

3

847 891

92 93 94 95 96R E V E N U E

(in millions)

3,12

0

3,10

8 3,49

9 3,80

4

3,84

0

C O M P O U N D E D A N N UA L

G ROW T H R AT E B Y R E G I O N

NorthAmerica

5%Latin

America4%

Asia13%

Europe22%

R E V E N U E G ROW T H B Y R E G I O N, 1 9 8 6 T O 1 9 9 6

NorthAmerica

30%Europe40%

Asia26%

LatinAmerica

4%

R3/Front 3/14 11/10/98 4:11 PM

C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E


(in thousands, except per share data) 1996 1995 1994

Revenue $3,840,303 $3,803,846 $3,498,553

Cost of products sold 3,256,345 3,217,869 2,965,675

Gross margin 583,958 585,977 532,878

Selling, marketing and administrative expenses 369,675 392,694 394,763

Restructuring charge 50,000 – –

Operating income 164,283 193,283 138,115

Interest expense (68,699) (81,186) (76,911)

Interest income 8,412 7,501 9,884

Net gain on assets sold or held for disposal – 61,655 –

Other income (expense) – net 4,535 (5,429) (2,943)

Income from continuing operations before income taxes 108,531 175,824 68,145

Income taxes (19,500) (56,000) (9,900)

Income from continuing operations 89,031 119,824 58,245

Income (loss) from discontinued operations, net of income taxes – (96,493) 9,638

Net income $ 89,031 $ 23,331 $ 67,883

Earnings (loss) per common share, primary and fully diluted

Continuing operations $ 1.47 $ 2.00 $ .98

Discontinued operations – (1.61) .16

Net income $ 1.47 $ .39 $ 1.14

See Notes to Consolidated Financial Statements.

(in thousands) 1996 1995

Current assets

Cash and short-term investments $ 34,342 $ 72,151

Receivables – net 518,266 462,303

Inventories 526,052 559,660

Prepaid expenses 47,164 43,087

Total current assets 1,125,824 1,137,201

Investments 72,930 63,319

Property, plant and equipment – net 1,024,135 1,016,991

Long-term receivables – net 69,861 28,409

Other assets 194,057 196,272

$2,486,807 $2,442,192

Current liabilities

Notes payable $ 20,478 $ 21,778

Current portion of long-term debt 1,497 1,779

Accounts payable 185,747 182,152

Accrued liabilities 454,208 451,181

Total current liabilities 661,930 656,890

Long-term debt 903,807 895,998

Deferred income taxes and other long-term liabilities 341,798 354,545

Minority interests 29,712 26,324

Commitments and contingencies

Common shareholders’ equity 549,560 508,435

$2,486,807 $2,442,192


C O N S O L I D A T E D B A L A N C E S H E E T S


(in thousands) 1996 1995 1994

Operating activitiesIncome from continuing operations $ 89,031 $ 119,824 $ 58,245Adjustments to continuing operations

Depreciation and amortization 111,073 113,325 119,847Equity earnings net of distributions (2,875) (6,533) (2,539)Net gain on assets sold or held for disposal – (61,655) –Provision for deferred income taxes (1,741) 30,429 14,073Restructuring charge 50,000 – –Other (8,203) 41 1,191Change in operating assets and liabilities, net of effects from acquisitions

Receivables - net (89,176) 53,142 (103,628)Inventories 27,222 (57,588) 1,376Prepaid expenses (3,823) 445 (9,383)Other assets (5,023) (19,245) (29,086)Accounts payable and accrued liabilities (54,311) 57,995 35,252Income taxes payable 20,041 (27,153) 8,558Other (37,262) 31,592 20,573

Cash flow provided by operating activities of continuing operations 94,953 234,619 114,479

Cash flow (used in) operating activities of discontinued operations – (11,467) (44,906)

Cash flow provided by operating activities 94,953 223,152 69,573Investing activities

Proceeds from sales of businesses and assets 58,417 432,746 17,223Capital additions (109,686) (90,276) (211,882)Purchases of investments and acquisitions, net of cash acquired (58,775) (35,251) (66,660)Other 438 998 879

Cash flow provided by (used in) investing activities of continuing operations (109,606) 308,217 (260,440)

Cash flow used in investing activities of discontinued operations – (15,144) (143,635)

Cash flow provided by (used in) investing activities (109,606) 293,073 (404,075)Financing activities

Short-term borrowings 19,694 29,348 54,213Repayments of short-term debt (20,449) ( 62,944) (69,202)Long-term borrowings 168,060 12,384 462,885Repayments of long-term debt (163,799) (675,098) (33,952)Proceeds from distribution of real estate and resorts business – 235,186 –Cash dividends paid (24,020) (23,861) (23,791)Other (2,642) 5,101 1,170

Cash flow provided by (used in) financing activities of continuing operations (23,156) (479,884) 391,323

Cash flow (used in) financing activities of discontinued operations – (9,352) (45,712)

Cash flow provided by (used in) financing activities (23,156) (489,236) 345,611Increase (decrease) in cash and short-term investments (37,809) 26,989 11,109Cash and short-term investments at beginning of year 72,151 45,162 34,053

Cash and short-term investments at end of year $ 34,342 $ 72,151 $ 45,162


C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W


N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S


NOTE 1 – NATURE OF OPERATIONS

Dole Food Company, Inc. and its consolidated subsidiaries (“the Company”) is engaged in the world-wide sourcing, processing, distributing and marketingof high quality, branded fresh produce food productsincluding fruits and vegetables. Operations are conductedthroughout North America, Latin America, Europe,including eastern European countries, and Asia, pri-marily in Japan and the Philippines.The Company isalso engaged in beverage operations in Honduras.

The Company’s principal products are produced onboth Company-owned or leased land and acquiredthrough associated producer and independent growerarrangements.The Company’s products are primarilypacked and processed by the Company and sold toretail and institutional customers and other food product companies.

NOTE 2 – SUMMARY OF ACCOUNTING POLICIES

Principles of Consolidation – The consolidated financialstatements include the accounts of all significantmajority-owned subsidiaries.All significant intercom-pany accounts and transactions have been eliminatedin consolidation.

Annual Closing Date – The Company’s fiscal year endson the Saturday closest to December 31.

Inventories – Inventories are valued at the lower of cost or market. Cost is determined principally on afirst-in, first-out basis. Specific identification and aver-age cost methods are also used for packing materialsand operating supplies.

Agricultural Costs – The costs of growing bananas andpineapples are charged to operations as incurred.Growing costs related to other crops are recognizedwhen the crops are harvested and sold.

Investments – Investments in affiliates and joint ven-tures with ownership of 20% to 50% are generallyrecorded on the equity method. Other investments areaccounted for using the cost method.

Property, Plant and Equipment – Property, plant andequipment are stated at cost, less accumulated depreci-ation. Depreciation is computed principally by thestraight-line method over the estimated useful lives ofthe assets.

Foreign Exchange – Net foreign exchange transactiongains or losses for subsidiaries with the United Statesdollar as their functional currency are included indetermining net income and resulted in net losses of$2.1 million, $2.4 million, and $3.5 million for 1996,

1995 and 1994, respectively. Net foreign exchangegains or losses resulting from the translation of assetsand liabilities of foreign subsidiaries whose local cur-rency is the functional currency are accumulated as aseparate component of common shareholders’ equity.

Income Taxes – Deferred income taxes are recognizedfor the tax consequences of temporary differences by applying enacted statutory tax rates to the differ-ences between financial statement carrying amountsand the tax bases of assets and liabilities.The incometaxes which would be due upon the distribution of foreign subsidiary earnings have not been providedwhere the undistributed earnings are considered permanently invested.

Earnings Per Common Share – Primary earnings percommon share are based on the weighted averagenumber of shares outstanding during the period afterconsideration of the dilutive effect of stock options.The primary weighted average number of commonshares outstanding was 60.4 million, 59.8 million and59.7 million for 1996, 1995 and 1994, respectively.

Cash and Short-Term Investments – Cash and short-term investments include cash on hand and timedeposits. Such short-term investments generally haveoriginal maturities of three months or less.

Fair Value of Financial Instruments – The historical car-rying amount is a reasonable estimate of fair value forshort-term financial instruments. Fair values for long-term financial instruments not readily marketablewere estimated based upon discounted future cashflows at prevailing market interest rates. Based onthese assumptions, management believes the fair mar-ket values of the Company’s financial instruments arenot materially different from their recorded amountsas of December 28, 1996.

Stock Based Compensation – Statement of FinancialAccounting Standards No. 123 (“SFAS 123”) defines afair value based method of accounting for employeestock compensation plans but allows for the continua-tion of the intrinsic value based method of accountingto measure compensation cost prescribed by Account-ing Principles Board Opinion No. 25 (“APB 25”). Inaccordance with SFAS 123, the Company has electedto continue to utilize the accounting method pre-scribed by APB 25 and adopt the disclosure require-ments of SFAS 123.

Use of Estimates – The preparation of financial state-ments requires management to make estimates andassumptions that affect the reported amounts of assetsand liabilities and disclosures of contingent assets andliabilities at the date of the financial statements andthe reported amounts of revenues and expenses dur-ing the reporting period.Actual results could differfrom those estimates.

Reclassifications – Certain prior year amounts havebeen reclassified to conform to the 1996 presentation.

NOTE 3 – ACQUISITIONS AND DISPOSITIONS

During 1996 and 1995, the Company acquired production and distribution operations in Europe and Latin America. Each of the acquisitions wasaccounted for as a purchase and accordingly, the pur-chase price was allocated to the net assets acquiredbased upon their estimated fair values as of the date ofacquisition.The fair values of assets acquired and lia-bilities assumed were $106 million and $48 million in1996 and $70 million and $35 million in 1995.

In 1996, the Company implemented a formal plan toclose its dried fruit facility located in Fresno, Cali-fornia which has suffered continued losses. During the fourth quarter of 1996, a restructuring charge of$50 million was recorded related to the closure of thisfacility.The principal component of the charge was a provision for asset write-downs of $38.5 million.Management anticipates the closure of this facility tobe completed in the second quarter of 1997.

During 1995, the Company completed the sale of itsjuice business, resulting in net proceeds of approxi-mately $270 million and a pretax gain of approxi-mately $145 million. In addition, during 1995 theCompany began to implement its plan to sell certainof its agricultural properties and other assets whichhave generated low returns.The book value of theassets to be sold exceeded the estimated fair value lesscosts to sell, resulting in an adjustment of $83.3 mil-lion.The above dispositions resulted in a net pretaxgain of $61.7 million.

NOTE 4 – DISCONTINUED OPERATIONS

On December 28, 1995, the Company completed theseparation of its real estate and resorts business [Castle& Cooke, Inc. (“Castle”)] from its food business in anontaxable distribution to its shareholders. Under the

plan of distribution, each Company shareholder ofrecord on December 20, 1995 received a dividend of one share of Castle common stock for every threeshares of the Company’s common stock.Approxi-mately $1.0 billion of net assets were transferred toCastle, and in partial consideration thereof the Company received cash proceeds of approximately$235 million and a $10 million note receivable fromCastle which bears interest at the rate of 7% perannum and is due December 8, 2000.As a result, theCompany’s common shareholders’ equity was reducedby approximately $582 million. (See Note 10.)

In connection with the distribution, the operatingresults of the real estate and resorts business have beenaccounted for as discontinued operations. Revenuesfrom discontinued operations for 1995 and 1994 were $349 million and $343 million, respectively.Income (loss) from discontinued operations reflects an allocation of the Company’s overall interest costs,based on the cash proceeds and the interest bearingnote received by the Company at distribution, of $7.3 million and $6.8 million after tax for 1995 and1994, respectively.

During the third quarter of 1995, the Companyreviewed certain of its real estate and resort proper-ties to determine whether expected future cash flows(undiscounted and without interest charges) fromeach property would result in the recovery of the car-rying amount of such property. Certain adverse developments in 1995 affecting the Lana’i resort andcertain other properties caused management to sub-stantially lower its estimates of future cash flow and led to a determination that the properties wereimpaired in accordance with generally acceptedaccounting principles and, accordingly, an impairmentloss of $103.8 million after tax was recorded as part ofdiscontinued operations in the accompanying 1995statement of income.

NOTE 5 – CURRENT ASSETS AND LIABILITIES

Short-term investments of $7.5 million and $16.3 mil-lion as of December 28, 1996 and December 30, 1995,respectively, consisted principally of time deposits.Outstanding checks which are funded as presented forpayment totaled $48.8 million and $54.8 million as ofDecember 28, 1996 and December 30, 1995, respec-tively, and were included in accounts payable.



Details of certain current assets were as follows:


Receivables

Trade $428,186 $374,441

Notes and other 138,577 125,534Affiliated operations 13,257 9,322

580,020 509,297

Allowance for doubtful accounts (61,754) (46,994)

$518,266 $462,303

Inventories

Finished products $169,280 $179,390

Raw materials and work in

progress 198,306 216,830

Growing crop costs 46,887 51,980

Packing materials 23,213 25,227Operating supplies and other 88,366 86,233

$526,052 $559,660

Accrued liabilities as of December 28, 1996 andDecember 30, 1995 included approximately $101 mil-lion and $109 million, respectively, of amounts due to growers.

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

Major classes of property, plant and equipment were as follows:


Land and land improvements $ 391,561 $ 397,015

Buildings and improvements 277,984 259,974

Machinery and equipment 910,785 832,855Construction in progress 54,728 81,339

1,635,058 1,571,183

Accumulated depreciation (610,923) (554,192)

$1,024,135 $1,016,991

Depreciation expense for 1996, 1995 and 1994 totaled$102.5 million, $106.2 million and $107.3 million,respectively.

NOTE 7 – DEBT

Notes payable consisted primarily of short-term bor-rowings required to fund certain foreign operationsand totaled $20.5 million with a weighted averageinterest rate of 15.7% as of December 28, 1996 and$21.8 million with a weighted average interest rate of 12.8% as of December 30, 1995.

Long-term debt consisted of:


Unsecured debt

Notes payable to banks at an

average interest rate of 5.9%

(6.8% – 1995) $172,300 $169,547

6.75% notes due 2000 225,000 225,000

7% notes due 2003 300,000 300,000

7.875% debentures due 2013 175,000 175,000

Various other notes due 1997-

2006 at an average interest rate

of 5.2% (5.4% – 1995) 23,808 17,085

Secured debt

Mortgages, contracts and notes

due 1998-2012, at an average

interest rate of 9.7%

(9.0% – 1995) 11,594 13,890

Unamortized debt discount andissue costs (2,398) (2,745)

905,304 897,777

Current maturities (1,497) (1,779)

$903,807 $895,998

The estimated fair value of fixed interest rate debtapproximated book value at December 28, 1996 andDecember 30, 1995.

Prior to 1996, the Company had a $1 billion, 5-yearrevolving credit facility. Net borrowings outstandingunder this facility were approximately $81 million atDecember 30, 1995. In July 1996, the Companyreplaced its existing revolving credit facility with a $600 million, five-year revolving credit facility (“Facil-ity”).At the Company’s option, borrowings under theFacility bear interest at a certain percentage over theagent’s prime rate or the London Interbank OfferedRate (“LIBOR”). Provisions under the Facility requirethe Company to comply with certain financialcovenants which include a maximum permitted ratioof consolidated debt to net worth and a minimumrequired fixed charge coverage ratio.At December 28,1996 net borrowings outstanding under this facilitywere approximately $90 million.The Company mayalso borrow under uncommitted lines of credit at ratesoffered from time to time by various banks that maynot be lenders under the Facility. Net borrowings out-standing under the uncommitted lines of credit totaled$82 million and $89 million at December 28, 1996 and December 30, 1995, respectively.

Sinking fund requirements and maturities with respect tolong-term debt as of December 28, 1996 were as follows(in millions): 1997 – $1.5; 1998 – $7.7; 1999 – $1.8;2000 – $226.1; 2001 – $173.5; and thereafter $494.7.


Interest payments during 1996, 1995 and 1994 totaled$68.4 million, $86.4 million and $67.6 million,respectively.

NOTE 8 – EMPLOYEE BENEFIT PLANS

The Company has qualified and non-qualified definedbenefit pension plans covering certain full-timeemployees. Benefits under these plans are generallybased on each employee’s eligible compensation andyears of service except for certain hourly plans whichare based on negotiated benefits.

For U.S. plans, the Company’s funding policy is tofund the net periodic pension cost plus a 15-yearamortization of the unfunded liability.The plans cover-ing international employees are generally not funded.

The status of the defined benefit pension plans was as follows:

U.S. Plans (in thousands) 1996 1995

Actuarial present value ofaccumulated benefit obligation

Vested $231,999 $227,572Non-vested 3,480 3,581

$235,479 $231,153

Actuarial present value of projected benefit obligation $248,676 $239,855

Plan assets at fair value, primarilystocks and bonds 250,154 238,730

Projected benefit obligation lessthan (in excess of ) plan assets 1,478 (1,125)

Unrecognized net transitionasset (774) (942)

Unrecognized prior service cost 2,078 2,662Unrecognized net gain (4,969) (83)Additional minimum liability (720) (1,941)

Accrued pension liability $ (2,907) $ (1,429)

International Plans (in thousands) 1996 1995

Actuarial present value ofaccumulated benefit obligation

Vested $ 9,099 $ 9,411Non-vested 5,036 3,303

$ 14,135 $ 12,714

Actuarial present value of projected benefit obligation $ 30,776 $ 28,796

Plan assets at fair value, primarilystocks and bonds 2,473 2,176

Projected benefit obligation in excess of plan assets (28,303) (26,620)

Unrecognized net transitionobligation 2,892 3,133

Unrecognized prior service cost 4,619 3,104Unrecognized net loss 108 1,576Additional minimum liability (583) (868)

Accrued pension liability $ (21,267) $ (19,675)

For U.S. plans, the projected benefit obligation wasdetermined using assumed discount rates of 7.75% in1996 and 7.5% in 1995 and assumed rates of increasein future compensation levels of 4.5% in 1996 and1995.The expected long-term rate of return on assetswas 9% in 1996 and 1995. For international plans, theprojected benefit obligation was determined usingassumed discount rates of 7.75% to 20% in 1996 and7.5% to 20% in 1995 and assumed rates of increase infuture compensation levels of 4.5% to 17.5% in 1996and 1995.The expected long-term rate of return onassets for international plans was 9% to 20% in 1996and 1995.

Pension expense for the U.S. and international plansconsisted of the following components:

(in thousands) 1996 1995 1994

Service cost – benefits

earned during

the year $ 9,143 $ 8,114 $ 7,158

Interest cost on

projected benefit

obligation 21,968 21,270 20,112

Actual (return) loss

on plan assets (32,823) (46,944) 4,656

Net amortization anddeferral 13,885 28,337 (22,980)

Net Periodic

Pension Cost $ 12,173 $ 10,777 $ 8,946

The Company recognized net curtailment losses of$1.3 million in 1996 for the domestic plans and $3.6 million in 1995 for the international plans.Theselosses were due to additional benefit payments result-ing from reductions in workforce.

The Company offers two 401(k) plans generally cov-ering all full-time U.S. employees. Eligible employeesmay defer a percentage of their annual compensationup to a maximum allowable amount under federalincome tax law to supplement their retirementincome.These plans provide for Company contribu-tions based on a certain percentage of each partici-pant’s contribution.Total Company contributions tothese plans in 1996, 1995 and 1994 were $3.8 million,$4.4 million and $4.7 million, respectively.

The Company is also a party to various industrywidecollective bargaining agreements which provide pension benefits.Total contributions to these plansplus direct payments to pensioners in 1996, 1995 and1994 were $1.2 million, $0.8 million and $0.9 million,respectively.

In addition to providing pension benefits, the Com-pany provides certain health care and life insurance


benefits for eligible retired employees. Certainemployees may become eligible for such benefits ifthey fulfill established requirements upon reachingretirement age.

The status of the postretirement benefit plans was as follows:


Accumulated postretirement

benefit obligation (“APBO”)

Retirees $62,991 $66,757

Fully eligible actives 5,746 6,892Other actives 4,439 7,669

73,176 81,318

Unrecognized prior service cost 2,080 1,897Unrecognized net gain 13,034 4,660

Accrued postretirement

benefit liability $88,290 $87,875

Postretirement benefit expense included the followingcomponents:

(in thousands) 1996 1995 1994

Service cost – benefits

earned during the year $ 237 $ 449 $ 578

Interest cost on APBO 5,482 7,258 6,755

Net amortization and

deferral (481) (342) 26Curtailment gain (577) – –

Net periodic

postretirement benefit cost $4,661 $7,365 $7,359

An annual rate of increase in the per capita cost ofcovered health care benefits of 9.5% in 1997 decreas-ing to 5.0% in 2006 and thereafter was assumed indetermining the APBO for the U.S. and internationalplans in 1996, and 10.0% in 1996 decreasing to 5.0%in 2006 was assumed in determining the APBO forthe U.S. plans in 1995. For the Company’s interna-tional plan, the assumed health care cost trend ratewas 20% in 1995. Increasing the assumed health carecost trend rate by one percentage point in each yearwould have resulted in an increase in the Company’sAPBO as of December 28, 1996 of approximately$7.4 million and the aggregate of the service andinterest cost components of postretirement benefitexpense for 1996 of approximately $0.6 million.Theweighted average discount rate used in determiningthe APBO was 7.75% for the international and U.S. plans in 1996 and 7.5% for the U.S. plans and20% for the international plan in 1995.The plans are not funded.

NOTE 9 – STOCK OPTIONS AND AWARDS

Under the 1991 and 1982 Stock Option and AwardPlans (“the Option Plans”), the Company can grantincentive stock options, non-qualified stock options,stock appreciation rights, restricted stock awards and performance share awards to officers and keyemployees of the Company. Stock options vest overtime or based on stock price appreciation and may be exercised for up to 10 years from the date of grant,as determined by the committee of the Company’sBoard of Directors administering the Option Plans.No stock appreciation rights, restricted stock awardsor performance share awards were outstanding atDecember 28, 1996.

Under the 1995 Non-Employee Directors StockOption Plan (the “Directors Plan”) each active non-employee director will receive a grant of 1,500 non-qualified stock options (the “Options”) on February15th of each year.The Options vest over three yearsand expire 10 years after the date of the grant or uponearly termination as defined by the plan agreement.

Changes in outstanding stock options were as follows:

WeightedAverage

Shares Price

Outstanding, January 1, 1994 1,719,782 $29.98

Granted 508,500 29.07

Exercised (12,117) 26.69Canceled (160,401) 34.39

Outstanding, December 31, 1994 2,055,764 $29.43

Granted 563,000 27.21

Exercised (371,989) 13.73

Canceled (294,513) 31.30

Adjustment for distribution of realestate and resorts business 8,158


Granted 711,000 38.52

Exercised (373,952) 30.04Canceled (103,661) 33.39


Exercisable, December 28, 1996 1,313,468 $29.59

The number and exercise price of all options out-standing were adjusted to reflect the impact of the distribution of the real estate and resorts business inDecember 1995. (See Note 4.)

Of the 2,193,807 options outstanding as of December 28,1996, 589,464 have exercise prices between $17.50 and$26.61 with a weighted-average exercise price of $25.40and a weighted-average remaining term of 6 years,792,523 have exercise prices between $27.07 and $34.31


with a weighted-average exercise price of $30.31 and a weighted-average remaining term of 6 years and811,820 have exercise prices between $36.52 and $41.75with a weighted-average exercise price of $38.21 and aweighted-average remaining term of 8 years.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes optionpricing model with the following weighted-averageassumptions for grants in 1996 and 1995, respectively;dividend yield of 1.0% and 1.5%, expected volatilityof 30% for both years, risk-free interest rates of 5.8%and 7.4% and expected lives of 9 years and 7 years.The weighted-average fair value of options grantedduring 1996 and 1995 was $15.08 and $11.23, respec-tively.The Company accounts for the Option Plansunder APB 25 and, accordingly, no compensationcosts have been recognized in the accompanyingstatement of income for 1996 or 1995. Had compen-sation costs for the Option Plans been determinedunder SFAS 123, pro forma net income and earningsper share would have been $86.0 million and $1.42,respectively, for 1996 and $22.2 million and $0.37,

respectively, for 1995. Since SFAS 123 was only appliedto options granted subsequent to December 31, 1994,the resulting pro forma compensation cost may not berepresentative of that to be expected in future years.

NOTE 10 – SHAREHOLDERS’ EQUITY

Authorized capital at December 28, 1996 consisted of 80 million shares of no par value common stockand 30 million shares of no par value preferred stock,issuable in series.At December 28, 1996, approxi-mately 5.4 million shares and 53,024 shares of com-mon stock were reserved for issuance under theOption Plans and the Directors Plan, respectively.There was no preferred stock outstanding.

The Company’s dividend policy is to pay quarterlydividends on common shares at an annual rate of 40 cents per share.

During 1996, the Company announced a program torepurchase up to 5% of its outstanding commonstock.As of December 28, 1996 the Company hadrepurchased 395,400 shares at a cost of $13.9 million.

Changes in shareholders’ equity were as follows:

Cumulative TotalAdditional Foreign Common Common

Common Paid-in Retained Currency Shareholders’ Shares(in thousands, except share data) Stock Capital Earnings Adjustment Equity Outstanding

Balance, January 1, 1994 $320,099 $164,908 $ 596,573 $(29,466) $1,052,114 59,455,918

Net income – – 67,883 – 67,883 –

Cash dividends declared ($.50 per share) – – (29,739) – (29,739) –

Translation adjustments – – – (10,272) (10,272) –Issuance of common stock 22 633 – – 655 22,190

Balance, December 31, 1994 320,121 165,541 634,717 (39,738) 1,080,641 59,478,108

Net income – – 23,331 – 23,331 –


Translation adjustments – – – (859) (859) –

Distribution of real estate and resorts business – – (581,866) – (581,866) –Issuance of common stock 376 4,725 – – 5,101 376,631

Balance, December 30, 1995 320,497 170,266 58,269 (40,597) 508,435 59,854,739

Net income – – 89,031 – 89,031 –


Translation adjustments – – – (21,244) (21,244) –

Issuance of common stock 374 10,858 11,232 373,952Repurchase of common stock (395) (13,479) – – (13,874) (395,400)

Balance, December 28, 1996 $320,476 $167,645 $ 123,280 $(61,841) $ 549,560 59,833,291


NOTE 11 – CONTINGENCIES

At December 28, 1996, the Company was guar-antor of $73 million of indebtedness of certain key fruit suppliers and other entities integral to the Company’s operations.

The Company is involved from time to time in various claims and legal actions incident to its opera-tions, both as plaintiff and defendant. In the opinionof management, after consultation with legal counsel,none of such claims is expected to have a materialadverse effect on the Company’s financial position orresults of operations.

NOTE 12 – LEASE COMMITMENTS

The Company has obligations under non-cancelableoperating leases, primarily for ship charters and con-tainers, and certain equipment and office facilities.Lease terms are generally for less than the economiclife of the property. Certain agricultural land leasesprovide for increases in minimum rentals based onproduction.Total rental expense was $158.7 million,$147.3 million and $117.1 million (net of sub-lease income of $12.4 million, $9.4 million and $8.7 million) for 1996, 1995 and 1994, respectively.

During 1995, the Company entered into an agree-ment with a syndicate of banks for the sale and lease-back for seven years of certain vessels.This transactiongenerated net proceeds of approximately $133 million.

At December 28, 1996, the Company’s aggregateminimum rental commitments, before subleaseincome, were as follows (in millions): 1997 – $146.0;1998 – $86.3; 1999 – $79.2; 2000 – $57.1; 2001 –$33.2; and thereafter – $195.9.Total future subleaseincome is $17.1 million.

NOTE 13 – INCOME TAXES

Income tax expense (benefit) was as follows:

(in thousands) 1996 1995 1994

Current

Federal, state and local $ 1,882 $ 2,292 $(25,594)

Foreign 19,359 23,279 21,421

21,241 25,571 (4,173)

Deferred

Federal, state and local (444) 30,656 8,989Foreign (1,297) (227) 5,084

(1,741) 30,429 14,073

$19,500 $56,000 $ 9,900

Pretax earnings attributable to foreign operations were$173 million, $181 million and $165 million for 1996,1995 and 1994, respectively. Undistributed earnings offoreign subsidiaries, which have been or are intendedto be permanently invested, aggregated $1.1 billion atDecember 28, 1996.

The Company’s reported income tax expense variedfrom the expense calculated using the U.S. federalstatutory tax rate for the following reasons:

(in thousands) 1996 1995 1994

Expense computed at

U.S. federal statutory

income tax rate $ 37,986 $ 61,538 $ 23,851

Foreign income taxed

at different rates (21,656) (16,366) (11,036)

Dividends from

subsidiaries 618 – 187

State and local income

tax, net of federal

income tax benefit 1,100 4,293 (584)Other 1,452 6,535 (2,518)

Reported income tax

expense $ 19,500 $ 56,000 $ 9,900

In 1996, the Company filed for and received a federalincome tax refund of $22.9 million related to overpay-ments made in 1995.Total income tax payments (netof refunds) for 1996, 1995 and 1994 were $(1.6) mil-lion, $51.3 million and $4.1 million, respectively.

Deferred tax assets (liabilities) were comprised of the following:

(in thousands) 1996 1995 1994

Operating reserves $ 45,246 $ 36,840 $ 2,053

Accelerated depreciation (21,717) (37,868) (35,040)

Inventory valuation

methods 3,670 3,690 13,086

Effect of differences

between book values

assigned in prior

acquisitions and

historical tax values (36,941) (37,927) (61,811)

Postretirement benefits 33,946 31,263 32,484

Current year acquisitions (6,560) – –

Tax credit carryforward 4,987 39,310 30,509

Net operating loss

carryforward 77,685 79,616 10,998Other, net (12,117) (22,308) (29,642)

$ 88,199 $ 92,616 $(37,363)


The Company has recorded deferred tax assets of$77.7 million reflecting the benefit of approximately$203 million in federal and state net operating losscarryovers which will, if unused, begin to expire in2009 (federal) and 2006 (state).

The tax credit carryforward amount of $5 million isprimarily comprised of alternative minimum tax credits which can be utilized to reduce regular tax liabilities and may be carried forward indefinitely,and general business credits which begin to expire in 2005.

Total deferred tax assets and deferred tax liabilitieswere as follows:

(in thousands) 1996 1995 1994

Deferred tax assets $ 253,831 $ 281,392 $ 182,078

Deferred tax liabilities (165,632) (188,776) (219,441)

$ 88,199 $ 92,616 $ (37,363)

The Company remains contingently liable withrespect to certain tax credits sold with recourse byFlexi-Van Corporation (“Flexi-Van”), the Company’sformer transportation equipment leasing business,to a third party in 1981.These credits, which havebeen contested by the Internal Revenue Service, con-tinue to be litigated by Flexi-Van. Flexi-Van, whichseparated from the Company in 1987 and was subsequently acquired by David H. Murdock, hasindemnified the Company against obligations thatmight result from the resolution of this matter.

NOTE 14 – GEOGRAPHIC AREA SEGMENT

INFORMATION

The Company’s only significant segment of business is food products. Revenue, operating income andidentifiable assets pertaining to the geographic areas in which the Company operates are presented below. Product transfers between geographic areas areaccounted for based on the estimated fair marketvalue of the products.

(in millions) 1996 1995 1994

Revenue

North America $1,843 $1,959 $1,933

Latin America 801 771 677

Asia 974 914 842

Europe 1,040 959 777

Intercompany elimination (818) (799) (730)

$3,840 $3,804 $3,499

Operating Income (Loss)

North America $ 76 $ 72 $ (8)


Asia 17 14 16

Europe 0 3 13Corporate (78) (34) (14)

$ 164 $ 193 $ 138

Identifiable Assets

North America $ 980 $ 973 $1,065


Asia 289 327 332

Europe 446 339 339

Net assets held

for distribution – – 1,066Corporate 77 105 107

$2,487 $2,442 $3,685

Notes: Revenue includes inter-area transfers from Latin America to North

America,Asia and Europe of $542 million, $514 million and $444 million

in 1996, 1995 and 1994, respectively; from Asia to North America and

Europe of $170 million, $184 million and $190 million in 1996, 1995

and 1994, respectively; from North America to Asia and Europe of $78 mil-

lion, $72 million and $77 million in 1996, 1995 and 1994, respectively;

and from Europe to North America,Asia and Latin America of $28 million,

$29 million and $19 million in 1996, 1995 and 1994, respectively.

Corporate operating loss for 1996 includes the restructuring charge of $50

million. Net assets held for distribution as of December 31, 1994 are related

to the real estate and resorts business distributed to the Company’s share-

holders in 1995. (See Note 4.)


NOTE 15 – QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following table presents summarized quarterly results.

First Second Third Fourth(in thousands, except per share data) Quarter Quarter Quarter Quarter Year

1996

Revenue $814,438 $1,041,191 $1,093,586 $891,088 $3,840,303

Gross margin 126,990 179,592 155,961 121,415 583,958Net income (loss) 30,009 63,580 22,966 (27,524) 89,031

Net income (loss) per common share $ .50 $ 1.05 $ .38 $ (.46) $ 1.47

1995

Revenue $849,124 $1,068,814 $1,048,594 $837,314 $3,803,846

Gross margin 150,749 183,423 148,756 103,049 585,977

Income from continuing operations 24,411 75,855 14,278 5,280 119,824

Income (loss) from discontinued operations (790) 2,807 (105,054) 6,544 (96,493)

Net income (loss) $ 23,621 $ 78,662 $ (90,776) $ 11,824 $ 23,331

Earnings (loss) per common share

Continuing operations $ .41 $ 1.27 $ .24 $ .09 $ 2.00

Discontinued operations (.01) .05 (1.76) .11 (1.61)

Net income (loss) per common share $ .40 $ 1.32 $ (1.52) $ .20 $ .39

The net loss for the fourth quarter of 1996 includes a charge of $50 million, before tax, related to the restructuring of the Company’s dried fruit business.All quarters have twelve weeks, except the third quarters of both years which have sixteen weeks.

NOTE 16 – COMMON STOCK DATA (UNAUDITED)

The following table shows the market price range ofthe Company’s common stock for each quarter in1996 and 1995.

High Low

1996

First Quarter $423/4 $341/8

Second Quarter 43 371/4

Third Quarter 431/2 387/8

Fourth Quarter 401/4 327/8

Year $431/2 $327/8

1995

First Quarter $283/8 $24

Second Quarter 281/4 303/4

Third Quarter 35 281/2

Fourth Quarter 38 331/2

Year $38 $24


R E P O R T O F I N D E P E N D E N T P U B L I C A C C O U N T A N T S

To the Shareholders and Board of Directors of Dole Food Company, Inc.:

We have audited the accompanying consolidated bal-ance sheets of Dole Food Company, Inc. (a Hawaiicorporation) and subsidiaries as of December 28, 1996and December 30, 1995, and the related consolidatedstatements of income and cash flow for the yearsended December 28, 1996, December 30, 1995 andDecember 31, 1994.These financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on thesefinancial statements based on our audits.

We conducted our audits in accordance with gener-ally accepted auditing standards.Those standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financial state-ments are free of material misstatement.An auditincludes examining, on a test basis, evidence support-ing the amounts and disclosures in the financial state-ments.An audit also includes assessing the accountingprinciples used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation.We believe that our audits pro-vide a reasonable basis for our opinion.

In our opinion, the consolidated financial statementsreferred to above present fairly, in all material respects,the financial position of Dole Food Company, Inc. andsubsidiaries as of December 28, 1996 and December 30,1995, and the results of its operations and its cash flowfor the years ended December 28, 1996, December 30,1995 and December 31, 1994, in conformity with generally accepted accounting principles.

Los Angeles, California

February 6, 1997

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S O F

R E S U L T S O F O P E R A T I O N S A N D F I N A N C I A L P O S I T I O N


1996 COMPARED WITH 1995

Revenue – Revenue increased 4% to $3,840.3 millionin 1996 from $3,694.5 million in 1995, excluding rev-enue from the juice business sold in 1995.The rev-enue growth resulted from a combination of increasedsales volumes and favorable pricing and 1996 businessacquisitions and joint ventures.

Selling, Marketing and Administrative Expenses – Selling,marketing and administrative expenses decreased 6%to $369.7 million or 9.6% of revenue in 1996 from$392.7 million or 10.3% of revenue in 1995. Of thedecrease, $17.1 million resulted from the sale of thejuice business in 1995.

Restructuring Charge – In 1996, the Company imple-mented a formal plan to close its dried fruit facilitylocated in Fresno, California which has suffered con-tinued losses. During the fourth quarter of 1996, arestructuring charge of $50.0 million ($41.0 millionafter tax or $0.68 per share) was recorded related tothe closure of this facility. Principal components ofthe charge are provisions for asset write-downs, con-tract terminations and severance payments. Manage-ment anticipates the closure of this facility to becompleted in the second quarter of 1997.

Operating Income – Operating income before therestructuring charge improved 10.9% to $214.3 mil-lion in 1996 compared to $193.3 million in 1995.Processed pineapple operations improved in 1996 dueto favorable pricing and reduced shipping costs. Freshpineapple operations benefited from the closure ofoperations in the Dominican Republic which histori-cally generated negative returns. Partially offsetting theimproved results from the pineapple operations was thereturn to normal pricing levels for the fresh vegetablebusiness which benefited from favorable pricing in1995 due to flooding.The return to normal pricinglevels was somewhat mitigated by increased volumesfor the value added, pre-cut salad business.

The European Union (“E.U.”) banana regulationswhich impose quotas and tariffs on bananas remainedin full effect in 1996, and continue in effect in 1997.Trade negotiations and discussions continue betweenthe E.U., the United States and the individual bananaexporting countries.These trade negotiations couldlead to further changes in the regulations governingbanana exports to the E.U.The net impact of thesechanging regulations on the Company’s future resultsof operations is not determinable at this time.

The Company distributes its products in more than 90 countries throughout the world. Its international salesare usually transacted in U.S. dollars and major Europeanand Asian currencies, while certain costs are incurred incurrencies different from those that are received from thesale of the product. Results of operations may be affectedby fluctuations of currency exchange rates in both thesourcing and selling locations.

Interest Expense, Net – Interest expense, net of interestincome, decreased to $60.3 million in 1996 from$73.7 million in 1995 as a result of lower average debtlevels throughout the year.

Other Income (Expense) – Other income for 1996increased $10.0 million from 1995 primarily due tothe gain on the sale of certain investments and otherassets and increased earnings from joint ventures.

Income Taxes – The Company’s effective tax ratedecreased to 18% in 1996 as a result of a change inthe mix of the Company’s foreign and domestic earn-ings.The 1995 tax rate was significantly impacted bythe sale of the juice business.

1995 COMPARED WITH 1994

Revenue – Revenue increased 9% to $3,803.9 million.Excluding revenue from the juice business which wassold in 1995, revenue increased 14%.The increase inrevenue was primarily attributable to growth in exist-ing product lines, increases in worldwide banana rev-enues and favorable pricing for the fresh vegetablebusiness which resulted from the March 1995 California floods.


Selling, Marketing and Administrative Expenses – Selling,marketing and administrative expenses from continu-ing operations were $392.7 million or 10.3% of rev-enue in 1995 compared to $394.8 million or 11.3% of revenue in 1994.The decrease was primarily due tothe sale of the juice business in the second quarter of1995 which was partially offset by business expansionsand acquisitions.

Operating Income – Operating income reflected signifi-cant improvement, increasing 40% to $193.3 millionin 1995 from $138.1 million in 1994. Higher earningsin 1995 were primarily related to improvements inthe worldwide banana market, particularly in thePacific Rim and the fresh vegetable business whichprofited from favorable pricing.The fresh andprocessed pineapple and the value-added, pre-cut salad businesses also posted improved results in 1995,partially offset by lower results for dried fruit and nut operations.

Net Gain on Assets Sold or Held for Disposal – Duringthe second quarter of 1995, the sale of the Company’sjuice business was completed, resulting in a pretaxgain of approximately $145 million. Revenues relatedto this business totaled approximately $109 millionand $300 million in 1995 and 1994, respectively. Inaddition, during the second quarter of 1995, theCompany began to implement its plans to sell certainof its agricultural properties and other assets whichgenerated low returns.The book value of the assets tobe sold exceeded their estimated fair value less coststo sell, resulting in an adjustment of $83 million.Thegain on the sale of the juice business, net of adjust-ments related to the planned disposal of assets, resultedin a net pretax gain of $61.7 million and an increasein the Company’s estimated 1995 annualized incometax rate from 23% to 32%.

Interest Expense, Net – Interest expense, net of interestincome, increased to $73.7 million in 1995 from $67.0 million in 1994, due to higher interest rates,offset by slightly lower average debt levels.

Income Taxes – The Company’s effective income taxrate increased to 32% in 1995 from 15% in 1994, pri-marily as a result of a change in the mix of domesticand foreign earnings impacted by the non-recurringgain on the sale of the juice business in the secondquarter of 1995.

Discontinued Operations – The Company reported a$96.5 million loss, net of tax, ($1.61 per share) fromdiscontinued operations in 1995.The loss from dis-continued operations includes distribution expenses of$3.0 million, net of tax, and a write-down of certainreal estate and resort properties of $103.8 million, netof tax.The write-down resulted primarily from cer-tain adverse developments in 1995 affecting the Lana’iresort and certain other properties which caused man-agement to substantially lower its estimate of theirfuture cash flows.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s operational and investing activities in1996 were financed by funds generated internally andcash on hand at December 30, 1995. Cash and short-term investments were $34.3 million at December 28,1996 compared to $72.2 million at December 30, 1995.

Operating activities generated cash flow of $95.0 mil-lion in 1996 compared to $234.6 million in 1995.Thedecrease was primarily related to higher receivablelevels resulting from increased sales and advances tokey fruit suppliers combined with a significant reduc-tion in accounts payable and accrued liabilities. Posi-tively impacting cash flow from operations were


higher sales which resulted in reduced inventory levelsat December 28, 1996 compared to December 30,1995 and the receipt of a federal income tax refund of$22.9 million.

In December 1996, the Company announced its planto close its Fresno, California dried fruit operationswhich will relieve future operations of sizable lossesand allow for a substantial reduction in working capi-tal requirements associated with this business.This initiative was taken as part of the Company’s overallplan to dispose of or liquidate assets which do notmeet the Company’s minimum return on investmentrequirements.

Capital expenditures for the acquisition and mainte-nance of productive assets were $109.7 million in1996 and were funded with cash provided by currentyear operations and the proceeds from the sale ofexisting assets and agricultural properties.The Com-pany also acquired a Spanish grower/marketer of citrus and fresh vegetables, a 50% interest in aGuatemalan banana producer and other food relatedoperations in Latin America and Europe for an aggregate cash purchase price of $58.8 million.

In July 1996, the Company replaced its existingrevolving credit facility with a $600 million, five-yearrevolving credit facility (“Facility”). Provisions underthe Facility require the Company to comply with cer-tain financial covenants which include a maximum

permitted ratio of consolidated debt to net worth anda minimum required fixed charge coverage ratio.AtDecember 28, 1996 net borrowings outstanding underthis facility were approximately $90 million.TheCompany may also borrow under uncommitted linesof credit at rates offered from time to time by variousbanks that may not be lenders under the Facility. Netborrowings outstanding under the uncommitted linesof credit totaled $82 million at December 28, 1996.

During 1996, the Company announced a program torepurchase up to 5% of its outstanding commonstock.As of December 28, 1996 the Company hadrepurchased 395,400 shares of its outstanding shares at a cost of $13.9 million.The Company does notexpect the stock repurchase program to affect theCompany’s ability to fund operating requirements,capital expenditures or acquisitions.

The Company paid four quarterly dividends of 10 cents per share on its common stock totaling $24.0 million in 1996.

The Company believes that cash from operations and its cash position will be sufficient to enable it tomeet its capital expenditure, debt maturity, commonstock repurchase, dividend payment and other funding requirements.

R E S U L T S O F O P E R A T I O N S A N D S E L E C T E D F I N A N C I A L D A T A


(in millions, except per share data) 1996 1995 1994 1993 1992

Revenue $3,840 $3,804 $3,499 $3,108 $3,120

Cost of products sold 3,256 3,218 2,966 2,609 2,633

Gross margin 584 586 533 499 487

Selling, marketing and administrative expenses 370 393 395 333 312

Cost reduction program – – – 43 42

Restructuring charge 50 – – – –

Operating income 164 193 138 123 133

Interest expense – net (60) (74) (67) (48) (48)

Net gain on assets sold or held for disposal – 62 – – –

Other income (expense) – net 5 (5) (3) (9) (12)

Income from continuing operations before

income taxes and accounting change 109 176 68 66 73

Income taxes (20) (56) (10) (4) (7)

Income from continuing operations before

accounting change 89 120 58 62 66

Discontinued operations – (97) 10 16 (2)

Income before accounting change 89 23 68 78 64

Cumulative effect of accounting change – – – – (48)

Net income $ 89 $ 23 $ 68 $ 78 $ 16

Earnings per common share, fully diluted

Continuing operations before accounting change $ 1.47 $ 2.00 $ .98 $ 1.04 $ 1.11

Discontinued operations – (1.61) .16 .26 (.04)

Cumulative effect of accounting change – – – (.81)

Net income $ 1.47 $ .39 $ 1.14 $ 1.30 $ .26

Other statistics

Working capital $ 464 $ 480 $ 495 $ 391 $ 398

Total assets 2,487 2,442 3,685 3,159 2,926

Long-term debt 904 896 1,555 1,111 950

Total debt 926 920 1,609 1,190 1,031

Common shareholders’ equity 550 508 1,081 1,052 1,001

Annual cash dividends per common share .40 .40 .40 .40 .40

Capital additions for continuing operations 110 90 212 174 164

Depreciation and amortization from

continuing operations 111 113 120 106 90

D I R E C T O R S A N D O F F I C E R S


DOLE FOOD COMPANY, INC.

Directors

Elaine L. Chao2

Distinguished FellowThe Heritage Foundation

Mike Curb1,3

ChairmanCurb Records, Inc.Curb Entertainment International Corp.

David A. DeLorenzoPresident and Chief Operating OfficerDole Food Company, Inc.

Richard M. Ferry1,2

President and DirectorKorn/Ferry International, Inc.(international executive search firm)

James F. Gary2,3

Chairman EmeritusPacific Resources, Inc.(international energy and holding company)

Zoltan Merszei3

Former Chairman and PresidentDow Chemical Company

David H. Murdock1

Chairman of the Board andChief Executive OfficerDole Food Company, Inc.

DOLE FOOD COMPANY, INC.

Officers

David H. MurdockChairman of the Board andChief Executive Officer

David A. DeLorenzoPresident and Chief Operating Officer

Gerald W. LaFleurExecutive Vice President

David A. CohenSenior Vice President – Acquisitions and Investments

Harvey J. HeimbuchVice President and Controller

George R. HorneVice President – Human Resources

Edward A. Lang, IIIVice President and Treasurer

Patrick A. NielsonVice President – International Legal andRegulatory Affairs

Thomas J. PerniceVice President – Public Affairs

David W. PerrigoVice President – Taxes

J. Brett TibbittsVice President – Corporate GeneralCounsel and Corporate Secretary

Roberta WiemanVice President

DOLE FOOD COMPANY

Operating Division Officers

Paul CuyegkengPresident – Dole Asia

William F. FeeneyPresident – Dole Europe

Juergen SchumacherPresident – Dole Latin America

Peter M. NolanPresident - Dole Packaged Foods

Lawrence A. KernPresident – Dole Fresh Vegetables

Gregory L. CostleyPresident – Dole North America Fruit

Roberto ZacariasPresident – Dole Honduran Beverage

1Executive, Finance and Nominating Committee2Audit Committee3Compensation and Employee Benefits Committee

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, strin-

gent quality control measures, state-of-the-art production

and transportation technologies, continuous improvement

through research and innovation, dedication to the safety of

our employees, and communities and the environment.

C O M P A N Y A N D S H A R E H O L D E R I N F O R M A T I O N

THE COMPANY

Founded in Hawaii in 1851, Dole FoodCompany, Inc. is the world’s largest producer and marketer of fresh fruit and vegetables, and markets a growing line of packaged foods. The Company does business in more than 90 countries and employs approximately 46,000 full-time people.

CORPORATE HEADQUARTERS

31365 Oak Crest DriveWestlake Village, CA 91361(818) 879-6600

AUDITORS

Arthur Andersen LLP633 West Fifth StreetLos Angeles, CA 90071

SECURITIES TRANSFER AND DIVIDEND

DISBURSEMENT AGENT

The First National Bank of BostonP.O. Box 644Boston, MA 02102(800) 733-5001

DIVIDEND REINVESTMENT PLAN

A cash dividend of $0.10 per common share was declared in each quarter of 1996for a total annual dividend of $0.40 pershare. Dole Food Company, Inc. does nothave a dividend reinvestment plan.

INVESTMENT INDUSTRY INQUIRIES

Members of the investment industry should direct inquiries to:Office of the TreasurerDole Food Company, Inc.31365 Oak Crest DriveWestlake Village, CA 91361(818) 879-6600

ADDITIONAL INFORMATION REQUESTS

For Annual Reports and Forms 10-K, please contact:Office of the Corporate SecretaryDole Food Company, Inc.31365 Oak Crest DriveWestlake Village, CA 91361Telephone (818) 879-6814Facsimile (818) 879-6615Dole’s Annual Report is available on theinternet at http://www.dole.com

STOCK EXCHANGE

Dole Food Company, Inc.’s common stock (DOL) is traded on the New York and Pacific Stock Exchanges.

INTERNET ADDRESS:http://www.dole.comhttp://www.dole5aday.com

Dole® is a registered trademark of Dole Food Company, Inc.

© 1997 Dole Food Company, Inc.All rights reserved.

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