DOLE FOOD COMPANY ANNOUNCES RESTRUCTURING OF ITS FRESH FLOWER BUSINESS
Westlake Village, CA - October 12, 2006
Focus is to Better Align Global Supply with Demand for Fresh Flowers,
Achieving Long-Term Growth for the Division
New Emphasis on Delivering Premium Quality Products and Service
WESTLAKE VILLAGE, CA. - October 12, 2006 - Dole Food Company, Inc. today announced that it was restructuring its Dole Fresh Flowers (DFF) division to better focus on high-value products and flower varieties, and position the business unit for future growth. Dole said that today's actions are a continuation of performance-improving measures that began in 2005, and represent an acknowledgement of the global challenges facing the fresh flower industry.
"The fresh flower business is highly fragmented and competitive. Industry oversupply has driven prices down, creating significant pressure on growers to improve performance. Latin American growers are also facing new competition from emerging markets in Africa and Asia," said John Amaya, president DFF. "Being a market leader also means making difficult decisions, and today we continue to take necessary steps to reinvent our business, implementing changes that will create efficiencies, improve performance and allow DFF to focus on markets in which Dole's quality products and service can earn a premium."
In a move to better align supply with demand, and focus on delivering superior products and service for its customers, DFF is implementing measures that will allow it to focus on delivering more desirable varieties of flowers to market, and increase the quality of those products. Specific actions DFF is taking include:
- DFF will close the flowers operation in Ecuador and two farms in Colombia (Porcelain and Splendor-Corzo), impacting 2,188 employees. These farms have historically produced products with limited/seasonal demand and have high costs.
- Additionally, DFF is downsizing other farms of the flowers operation, which will impact 1,275 employees.
- A global sales force reduction of 35 percent is underway, and DFF is making additional administrative/management workforce reductions of 29 percent.
- DFF subsidiaries' employees in Colombia and Ecuador who are impacted by today's announcement will receive appropriate severance benefits.
- In addition to reducing headcount in the operation, DFF also is taking steps to lower infrastructure/overhead costs throughout the operation.
- The above measures are expected to improve annual cash flow by approximately US $35 million. Restructuring charges, the bulk of which are expected to be recorded during the third and fourth quarters of 2006, are estimated at US $26 million, of which approximately $13 million represents cash.
- Certain DFF customers will be impacted by this restructuring, and are currently being notified by the company. DFF is committed to maintaining relationships with current or past customers as it completes this restructuring and focuses efforts on penetrating new markets with a premium product.
"DFF understands, and takes very seriously, the impact that today's announcement will have on employees and their families. We are working with our employees and government officials in Colombia and Ecuador to ensure the payment of severance benefits and a smooth transition for these changes," said Amaya.
About Dole Fresh Flowers
DFF is the largest producer of fresh-cut flowers in Latin America. Over 90% of DFF's Latin American flowers are shipped into North America. DFF's products include over 800 varieties of fresh-cut flowers, such as roses, carnations and alstroemeria, and are produced on approximately 1,400 acres in Colombia and Ecuador. DFF's subsidiaries own and operate packing and cooling facilities on their flower farms, and one of its subsidiaries leases a facility in BogotÃ¡, Colombia for bouquet construction.
DFF guarantees daily deliveries by air. Immediately after harvesting, DFF flowers are flown to its Miami facility where temperatures are maintained within one-half degree of required levels in all warehouse and production operations. Maintaining the cold chain enables DFF to deliver the freshest and healthiest flowers to the market.
About Dole Food Company, Inc.
Dole Food Company, Inc., with 2005 revenues of $5.9 billion, is the world's largest producer and marketer of high-quality fresh fruit, fresh vegetables and fresh-cut flowers. Dole markets a growing line of packaged and frozen foods and is a produce industry leader in nutrition education and research.
This release contains "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. Forward looking statements, which are based on management's current expectations, are generally identifiable by the use of terms such as "may," "will," "expects," "believes," "intends" and similar expressions. The potential risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein include weather-related phenomena; market responses to industry volume pressures; product and raw materials supplies and pricing; changes in interest and currency exchange rates; economic crises and security risks in developing countries; international conflict; and quotas, tariffs and other governmental actions. Further information on the factors that could affect Dole's financial results is included in its SEC filings, including its Annual Report on Form 10-K.