Investor Relationss22.q4cdn.com/651150316/files/doc_financials/quarterly/2016/q2/Au… · Asia...

51
Fresh Del Monte Produce Inc. Investor Relations August 2016

Transcript of Investor Relationss22.q4cdn.com/651150316/files/doc_financials/quarterly/2016/q2/Au… · Asia...

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Fresh Del Monte Produce Inc.

Investor Relations

August 2016

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Forward-Looking Statements

This presentation contains certain forward-looking statements regarding the intent, beliefs or current expectations of the Company or its officers with respect to the Company’s plans and future performance. These forward-looking statements are based on information currently available to the Company and the Company assumes no obligation to update these statements. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties. All forward-looking statements in this presentation are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. The Company’s plans and performance may also be affected by the factors described in Item 1A. – “Risk Factors” in Fresh Del Monte Produce Inc.’s Annual Report on Form 10-K for the year ended January 1, 2016 along with other reports that the Company has on file with the Securities and Exchange Commission.

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• Fresh Del Monte At A Glance

• Strengths We Are Building On

• Strategic Direction

• Financial Overview

Agenda

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South America

Colombia, Ecuador,

Central America and

Brazil

Europe and

AfricaNorth America

Middle East and

North Africa

Asia Pacific

One of the world’s leading vertically-integrated producers, distributors and marketers of fresh and fresh-cut fruit and vegetables as well as a leading producer and distributor of

prepared fruit and vegetables, juices, beverages, snacks and desserts in Europe, Africa, the Middle East and countries formerly part of the Soviet Union.

47,000 Employees

39 Worldwide Distribution Centers / 16 Fresh-Cut Operations

13 Owned / 6 Chartered Vessels

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Fresh Del Monte At A Glance ● 1892 - Del Monte® brand established

● 1989 - Fresh business separated from canned

● 1996 - Del Monte Fresh Produce acquired by current management; 1997 IPO NYSE

● 1996 - Introduced the first new pineapple variety in more than 15 years; the Del Monte Gold® Extra Sweet Pineapple

● 1999 - Expanded “value-added” to include fresh-cut fruit and vegetables

● 2004 - Acquired Del Monte Foods Europe

● 2008 - Acquired Caribana, substantially increasing Del Monte® branded banana and Del Monte Gold® pineapple production in Costa Rica

● 2013 and 2014 - Acquired tomato agricultural production land in Florida and Virginia

● 2013 and 2014 - Acquired additional production land in Costa Rica and Nicaragua and expanded Philippine banana production

● 2014 - Launched a protein line in our Dallas facility and rolled out protein salads and snack offerings that include fresh fruit and vegetables

● 2014 - Del Monte Fresh Produce opened its first distribution center and fresh-cut facility in Canada

● 2016 – Acquired blueberry farm in Chile5

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Global Leadership Team

Name Title Years at FDP

Mohammad Abu-Ghazaleh Chairman and CEO 19

Hani EI-Naffy President and COO 19

Richard Contreras Senior VP and CFO 17

Bruce A. Jordan Senior VP – General Counsel and Secretary 13

Emanuel LazopoulosSenior VP – North America Sales, Marketing and

Product Management13

Paul Rice Senior VP – North America Operations 28

José Antonio YockSenior VP – CECAB (Colombia, Ecuador, Central

America and Brazil)34

Marissa R. Tenazas Senior VP – Human Resources 19

Hans SauterVP – Corporate Research & Development and

Agricultural Services28

Sergio Mancilla Vice President – South America 19

Youssef Zakharia Vice President – Europe and Africa 16

Mohammad Abbas Vice President – MENA (Middle East & North Africa) 9

Hector Rivera Vice President – Asia Pacific 4

Fresh Del Monte At A Glance – Experienced and Results Oriented

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Fresh Del Monte At A Glance - Continually Evolving Company

Then Now

Delivery System Truckload shipments2 Distribution Centers

(“DC’s”)

SourcingLimited Global basis

Commodity ProducerMore than 100

products

LogisticsChartered vessels

CustomersPredominantly retailers & wholesalers

Product Range

Owned & chartered vessels

Truckload shipments, Just in Time (“JIT”),

Direct Store Delivery (“DSD”)Global DC’s &

Fresh-Cut Operations (“FCO’s”)

Retailers, Club Stores, Convenience, Petro

Stations,Quick Serve Chains,

Foodservice 7

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Fresh Del Monte At A Glance – Then and Now

Net Sales by Product

Net Global Sales of $4.1 Billion

Expanded Products Platform

Net Global Sales of $1.2 Billion

Bananas 75% Other Fresh 21% Other 4% Bananas 46% Other Fresh 45% Prepared Food 4%

4%

6%

15%

75%

1996

Other

Melons

Pineapples

Bananas

9%2%

46%14%

12%

7%

4% 3% 1%

2015

Prepared Food

Other Fruit, Products &Services

Bananas

Gold Pineapple

Fresh-Cut Products

Non-Tropical Fruit

Avocados

Melons

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Net Sales by Region 1996

Asia

Europe

Other

North America

11%

18%

14%

2%

55%

2015

Asia

Europe

Middle East & NorthAfrica

Other

North America

Net Global Sales of $4.1 Billion

International Expansion

49%

13%

35%

3%

Net Global Sales of $1.2 Billion

North America $2,236.1 / Europe $736.1 / Middle East $554.3 / Asia $434.5

in Millions

Fresh Del Monte At A Glance – Then and Now

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Strengths We Are Building On

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Looking Into The Future

“By 2050, demand for food will rise 70 per cent yet our capacity to increase food production is declining.”

Source: Oxfam International, June 1, 2011

“We will need to double irrigation by 2050 to grow enough food to meet demand of an estimated population of 9 billion people”

Source: WWF (http://wwf.panda.org/what_we_do/how_we_work/conservation/freshwater/)

CONCLUSION

“Land is scarce and will become scarcer as the world has to double food output to satisfy increased demand by 2050. With limited land and water resources, this will automatically lead to increased valuations of productive land.”

Source: Joachin von Braun, International Food Policy Research Institute

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Looking Into The Future

Source: The United Nations (2010)

6,000

6,500

7,000

7,500

8,000

8,500

9,000

9,500

2013 2023 2033 2043

Mill

ion

s

Global Population

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1900 1994 2050

Farm Acreage Per Capita

Source: Food, Land, Population, and the US Economy – Cornell

University / Instituto of Nazionale della Nutrizione (1994)

7,130

7,868

8,499

9,017

5.0

1.8

0.6

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We were the:

● FIRST to introduce premium gold pineapple

● FIRST to complete national distribution network

● FIRST to launch national fresh-cut fruit

● FIRST to achieve GlobalG.A.P.

ONLY true multi-national fruit company

Strengths We Are Building On – Industry Leader

Leader and Pioneer in Consumer and Industry Trends

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Most Innovative Fresh Produce Company

Introduction of Del Monte Gold® Extra Sweet Pineapple

Source: USDA- 2013 Fruit and Fruit and Tree Nut Yearbook

Focus on R&D with Cutting-Edge, State-of-Art Facilities

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A leading marketer of branded canned pineapple and canned fruit

in European markets and the Middle East

A leading marketer of bananas, pineapples, deciduous fruit and vegetables in

the Middle East

#1

#3

#1

Marketer of fresh pineapples worldwide

Marketer of bananas worldwide

A leading marketer of branded grapes in the U.S.

A leading marketer of branded avocados in the U.S.

A leading marketer of poultry and meat products in Jordan

Marketer of fresh-cut fruit in the U.S., Japan, U.K., UAE and Saudi Arabia

Strengths We Are Building On – Leading Market Positions

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Strengths We Are Building On - The Del Monte® Brand

High Brand Recognition‒ One of the most widely recognized food brands worldwide with over 90%

awareness

‒ Hold leadership positions across several categories

‒ Enhances premium pricing potential

‒ One of the 2 top of mind brands when consumers are asked to remember a fresh produce brand

Broad Appeal ‒ Transferability of brand to new products and new categories

‒ Ease of entry into new markets

‒ Greater acceptance at a lower cost of entry

Health & Wellness‒ No artificial ingredients

‒ Better-for-you attributes

‒ Toddlers to retirees 16

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Strengths We Are Building On – Production and Sourcing

South

America

Sourcing

• Avocados

• Non-tropical

• Berries

Asia

• Bananas

• Pineapples

• Fresh-cut fruit

• Non-tropicals

Colombia,

Ecuador, Central

America & Brazil

Sourcing

• Bananas

• Pineapples

• Melons

• Mangos

• Plantains

• IQF

• Coconuts

• Greenhouse:

Tomatoes, Bell

Peppers,

Cucumbers and

Other Vegetables

North America

• Fresh & Fresh-cut fruit

and vegetables

• Prepared Food

• Protein salads & snacks

Africa

Sourcing

• Bananas

• Pineapples

• Prepared Food

Europe

• Fresh & Fresh-cut fruit

and vegetables

• Prepared Food

Middle East & North Africa

• Fresh & Fresh-cut fruit and

vegetables

• Prepared Food

• Poultry & Meat

In 2015 - 45% of Our Fresh Produce was Grown on Company-Controlled Farms

100,000 Acres Under Production 17

Mexico

Sourcing

• Avocados

• Vegetables

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Strengths We Are Building On – Quality & Safety

Our Commitment to Best in Class Quality Assurance and Food Safety Systems

To demonstrate compliance with international regulations and standards on environmental protection, food safety and social accountability, our farms and our facilities are certified by one or more of the following standards:

• Global GAP

• ISO 14001 and ISO 9001

• SCS Sustainably Grown

• OHSAS 18001

• Rainforest Alliance

• PrimusGFS

• FSSC / ISO 22000

• SQF

• Certifications carried out by external and internal parties are conducted on a regular basis

• On-going training in all areas of quality and safety

• Trained quality control professionals – Chemistry, Microbiology and Agricultural Services

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Strengths We Are Building On – Unmatched Scale and Scope A Key Differentiator - Quality Control, Lower More Stable Costs and Value-Added Services

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Our Growth Strategy

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• Leverage existing infrastructure• Expand geographic presence• Enter new distribution channels• Grow our existing product lines• Add new product lines to our portfolio

Growth Strategy – Investing For Long-Term Growth

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Example: Del Monte® North America Fresh-Cut Growth

Strategy In Action – Grow Existing Products

$150

$200

$250

$300

$350

$400

2008 2009 2010 2011 2012 2013 2014 2015

Ne

t S

ale

s

in M

illi

on

s

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CO

NS

UM

ER

S

FO

OD

SE

RV

ICE • Premeasured and customized

packaging

• Health and wellness

• Food safety

• Desire for convenience

• Pre-washed and pre-packaged

• Healthy and on-the-go

• Ready-to-eat/use

Strategy In Action – Large Market Opportunity

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Stringent food safety standards Grow most of our own raw material Cold chain control Value-added services Reliable year-round deliveries Complete infrastructure

Strategy In Action – Fresh-Cut Products Trends Play to Our Strengths

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Example: Del Monte® North America Avocado Growth

Strategy In Action – Grow Existing Products

$0

$50

$100

$150

$200

2008 2009 2010 2011 2012 2013 2014 2015

Ne

t S

ale

s

in M

illi

on

s

25

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More Value to Customers, Leverage Our Infrastructure and Leverage Our Brand

North America Europe & Africa

• Fresh-cut products• Juice varieties• Fruit Express• Ice Lollies• Prepared sauces and

mealreplacements

• Squeezies• Canned Gold

Pineapple

Middle East

• Fresh vegetables• Fresh juices• Canned juices • Frozen vegetables• Frozen french fries • Frozen meat

products• Chocolate covered

fruit• Hummus• Beans• Olives• Olive oil• Canned tuna• Catering services

Asia

• Fresh-cut products • Fresh-cut vegetables• UHP avocados• Protein salads and

snacks• Field grown

tomatoes

Strategy In Action – New Products

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Strategy In Action – New Products and Packaging

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Strategy In Action – North America

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Strategy In Action – Europe

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Strategy In Action – Middle East and North Africa

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Strategy In Action – Asia

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Expanding Global Footprint

North America Europe & Africa Middle East

AsiaColombia, Ecuador,

Central America and Brazil South America

• Canada – Distribution center,

fresh-cut and protein salad and

snacks production facility

• Texas – Protein salad and snack

production facility

• Florida and Virginia – Field

grown tomatoes

• France – Distribution center with

ripening facility and Fresh-Cut

center

• Kenya – Can manufacturing

line, fresh, frozen and PET juice

production lines, mango and

bean production, premium

canned pineapple

• Dubai – Market Stores,

vending machines and fresh prep

kitchen facility

• Saudi Arabia – Canned juice

operations, frozen food

production lines and catering

facility

• Turkey, Iraq, Russia and Ukraine

– Sales and marketing

• Jordan, Turkey and Saudi Arabia

– Vegetable farms

• Japan – Two fresh-cut facilities

• Korea – Distribution center and

fresh-cut facility

• Costa Rica – Additional pineapple

production

• Costa Rica – Juice processing

plant

• Chile – Additional blueberry

production

• Chile – New packaging technology

Strategy In Action – New Growth Markets

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Maximize logistics utilization‒ Refrigerated vessels, containers and trucks‒ Originally banana infrastructure‒ Higher-margin products essentially ride for free

Maximize agricultural land ‒ Increase our production versus independent growers

Maximize distribution centers, fresh-cut and protein facilities ‒ Streamline operations and further leverage our sales capabilities

Strategy In Action – Leveraging Infrastructure

Maximizing Revenues From Our Existing Infrastructure to Increase Volume and Reduce Costs

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Strategy In Action – Leveraging Infrastructure

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Financial Performance – Bananas

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in Millions

2011 2012 2013 2014 2015 2015 2016

Price / Box 14.22$ 14.14$ 14.52$ 14.80$ 14.33$ 15.06$ 15.30$

Net Sales 1,653$ 1,545$ 1,693$ 1,805$ 1,868$ 514$ 497$

Gross Profit* 86$ 90$ 62$ 109$ 77$ 45$ 67$

Gross Profit Margin 5% 6% 4% 6% 4% 9% 13%

* Excludes asset impairment & other charges.

Full Year 2nd Quarter

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Financial Performance – Other Fresh Produce

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in Millions

2011 2012 2013 2014 2015 2015 2016

Net Sales 1,582$ 1,545$ 1,639$ 1,745$ 1,826$ 524$ 497$

Pineapples 529$ 513$ 510$ 577$ 525$ 151$ 123$

Fresh-Cut 354$ 391$ 408$ 381$ 467$ 124$ 135$

Non-Tropical 265$ 264$ 296$ 284$ 271$ 93$ 86$

Avocados 69$ 68$ 99$ 130$ 175$ 50$ 58$

Gross Profit* 178$ 207$ 194$ 211$ 209$ 55$ 60$

Gross Profit Margin 11% 13% 12% 12% 11% 10% 12%

* Excludes asset impairment & other charges.

Full Year 2nd Quarter

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Financial Performance – Prepared Food

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in Millions

2011 2012 2013 2014 2015 2015 2016

Sales 355$ 332$ 353$ 378$ 363$ 97$ 94$

Gross Profit* 54$ 46$ 35$ 45$ 57$ 15$ 19$

Gross Profit Margin 15% 14% 10% 12% 16% 15% 20%

* Excludes asset impairment & other charges.

Full Year 2nd Quarter

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SELECTED FINANCIAL HIGHLIGHTS

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Financial Performance – Summary Data

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in Millions

2011 2012 2013 2014 2015 2015 2016

Net Sales 3,590$ 3,421$ 3,684$ 3,928$ 4,057$ 1,134$ 1,089$

Gross Profit 320$ 342$ 290$ 365$ 342$ 114$ 145$

% margin 9% 10% 8% 9% 8% 10% 13%

Operating Income 116$ 161$ (28)$ 174$ 91$ 74$ 107$

Net Income 93$ 143$ (34)$ 142$ 62$ 64$ 96$

EPS - GAAP 1.56$ 2.46$ (0.61)$ 2.53$ 1.17$ 1.21$ 1.86$

EPS Adjusted* 1.82$ 2.54$ 1.57$ 2.74$ 2.45$ 1.18$ 1.75$

2011 2012 2013 2014 2015 2015 2016

Operating Cash Flow 196$ 173$ 109$ 231$ 231$ 180$ 269$

Capital Expenditures 79$ 80$ 160$ 149$ 132$ 53$ 67$

Total Debt 216$ 126$ 251$ 267$ 254$ 209$ 192$

* Excludes asset impairment & other charges.

Full Year

Full Year 2nd Quarter

2nd Quarter

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Financial Performance – Earnings Per Diluted Share

$1.82

$2.54

$1.57

$2.74$2.45

$1.18

$1.75

Excludes asset impairment and other charges.

2011 2012 2013 2014 2015 2015 20166 Months

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Financial Performance – Adjusted EBITDA

$192$232

$178

$244$219

$88$119

Excludes asset impairment and other charges.

2011 2012 2013 2014 2015 2015 20166 Months

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Financial Performance – Operating Cash Flow

in Millions

$197$173

$109

$180

$269

2011 2012 2013 2014 2015 2015 20166 Months

$231 $231

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Financial Performance – Debt and Cap-Ex

We Have Continued Investing in Diversification and Expansion Without Adding Significant Debt

in Millions

$582 million spent under stock repurchase program between 2010 and Q2 2016

Dividend Policy• Quarterly cash dividend of $0.15 per

ordinary share $216

$126

$251 $267 $254

2011 2012 2013 2014 2015

Debt

6 Months

$79 $80

$160 $149

$132

$53 $67

2011 2012 2013 2014 2015 2015 2016

Cap-Ex

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• Clear growth strategy – outstanding execution and momentum

• Positioned like no one else – vertically integrated and innovative

• Respected – global “mega” brand that speaks to health and wellness, and quality and convenience

• Global player

• Commitment to long-term value

Investment Highlights

Strong Foundation Built on Diversification

ULTIMATE health & wellness company45

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APPENDIX

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Appendix – Income Statement

47

in Millions

2011 2012 2013 2014 2015 2015 2016

Net Sales 3,590$ 3,421$ 3,684$ 3,928$ 4,056$ 1,134$ 1,089$

Cost of Sales 3,272 3,079 3,392 3,562 3,714 1,020 943

Restructuring and Other Charges (1) 1 2 1 - - -

Gross Profit 320 342 290 365 342 114 145

% Margin 9% 10% 8% 9% 8% 10% 13%

SG & A 190 177 176 176 184 42 45

Gain (Loss) on Sale of Assets 3 - (5) (4) 2 1 9

Asset Impairment & Other Chgs. 16 3 137 11 70 (1) 3

Operating Income 116 161 (28) 174 91 74 107

% Margin 3% 5% -1% 4% 2% 6% 10%

Interest Expense (6) (2) (2) (3) (4) (1) (1)

Other, Net (12) (4) 13 (14) (11) (2) (1)

Tax (Expense) Benefit (6) (12) (17) (14) (14) (6) (9)

Net Income 93$ 143$ (34)$ 142$ 62$ 65$ 96$

% Margin 3% 4% -1% 4% 2% 6% 9%

EPS - GAAP 1.56$ 2.46$ (0.61)$ 2.53$ 1.17$ 1.21$ 1.86$

EPS Adjusted * 1.82$ 2.54$ 1.57$ 2.74$ 2.45$ 1.18$ 1.75$

* Excludes asset impairment & other charges.

Full Year 2nd Quarter

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Appendix – Income Statement - Non-GAAP Measures

48

July 1, June 26,

2016 2015

Non-GAAP Measures (per share):

Reported net income - Diluted 1.86$ 1.21$

Asset impairment and other charges (credits), net (1) 0.06$ (0.01)$

Gain on sale of assets (2) (0.17)$ (0.02)$

Comparable net income - Diluted 1.75$ 1.18$

Quarter Ended

1. Asset impairment and other charges (credits), net, for the quarter and six months ended July 1, 2016 included impairment

charges in Asia and Central America. Asset impairment and other charges (credits), net, for six months ended June 26,

2015 related principally to damages resulting from unfavorable weather conditions in Chile. Additionally, asset impairment

and other charges (credits), net for the quarter ended June 26, 2015 included a credit due to litigation settlement.

2. Gain on disposal of property, plant and equipment, net for the quarter and six months ended July 1, 2016 included gain on

sale of assets comprised of $8.9 million related to the sale of surplus lands in Central and South America. Gain on disposal

of property, plant and equipment, net included gain on sale of assets of $1.3 million for the quarter ended June 26, 2015

and $2.4 million for the six months ended June 26, 2015 principally related to the sale of refrigerated vessels.

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Appendix – Non-GAAP Measures

49

The Company's results are determined in accordance with U.S. generally accepted accounting principles (GAAP). Some of the information presented in this press release reflects adjustments to GAAP measures such as amounts related to restructuring, asset impairment charges, gain on sales of assets and certain other special items, if any. Management believes these adjustments provide a more comparable analysis of the ongoing operating performance of the business. These adjustments result in non-GAAP financial measures and are referred to in this press release as comparable operating income, comparable net income and comparable net income per share. Because all companies do not use identical calculations, our presentation of these non-GAAP financial measures may not be comparable to similarly titled measures used by other companies.

Comparable operating income and comparable net income provide us with an understanding of the results from the primary operations of our business. We use comparable operating income and comparable net income to evaluate our period-over-period operating performance because management believes they provide more comparable measures of our continuing business as they adjust for special items that are not reflective of the normal earnings of our business. These measures maybe useful to an investor in evaluating the underlying operating performance of our business because these measures:

1. Are used by investors to measure a company's comparable operating performance; 2. Are financial measurements that are used by lenders and other parties to evaluate creditworthiness; and3. Are used by our management for various purposes, including as measures of performance of our operating entities and as

a basis of strategic planning and forecasting.

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Appendix – Cash Flow

50

in Millions

2011 2012 2013 2014 2015 2015 2016

Net Income* 95$ 145$ (34)$ 145$ 66$ 110$ 179$

Non-Cash Charges 91 73 210 93 150 39 41

Working Capital 10 (45) (70) (7) 14 30 49

Operating Cash Flow 196 173 109 231 231 179 269

Capital Expenditures (79) (80) (160) (149) (132) (53) (67)

Acquisitions/Disposals 5 10 (10) (11) 7 6 (40)

Changes in Debt (81) (88) 127 16 (19) (59) (66)

Dividends (18) (23) (28) (28) (26) (13) (13)

Share Repurchase (50) (13) (95) (131) (117) (85) (69)

Equity Securities - (3) 8 - - - -

Proceeds From Share Issuance - - - - - - -

Proceeds from Stock Options 23 10 44 49 35 20 4

Other, Net 2 7 8 15 12 5 -

Net Change in Cash (2)$ (7)$ 3$ (8)$ (9)$ -$ 18$

* Excludes noncontrolling interest.

Full Year 6 Months

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Appendix – Balance Sheet

51

in Millions

2011 2012 2013 2014 2015 2015 2016

ASSETS

Cash & Short Term Investments 47$ 40$ 43$ 34$ 25$ 34$ 43$

Accounts Receivable 355 354 398 414 417 460 414

Inventory & Other 490 532 575 593 544 529 465

CURRENT ASSETS 892 926 1,016 1,041 986 1,023 922

Property, Plant & Equipment 1,023 1,025 1,101 1,170 1,215 1,181 1,248

All Other Assets 589 583 472 464 395 466 415

TOTAL ASSETS 2,504$ 2,533$ 2,589$ 2,675$ 2,596$ 2,670$ 2,584$

LIABILITIES

Current Liabilities 370$ 362$ 383$ 409$ 382$ 411$ 356$

Long Term Debt 213 124 249 265 253 207 192

Other Liabilities 206 216 207 213 211 216 227

TOTAL LIABILITIES 789 702 838 887 845 834 775

SHAREHOLDER'S EQUITY 1,715 1,831 1,751 1,788 1,751 1,836 1,809

LIAB. & SHAREHOLDER'S EQUITY 2,504$ 2,533$ 2,589$ 2,675$ 2,596$ 2,670$ 2,584$

Full Year 6 Months