Investor Relationss22.q4cdn.com/651150316/files/doc_financials/quarterly/2016/q2/Au… · Asia...
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
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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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Retailers
Foodservice
Casual Dining
& Quick Serve
Convenience
Stores
Warehouse &
Club Stores
Strategy In Action – Continue to Build Relationships, Grow Sales
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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
37
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
38
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
40
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
41
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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
42
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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
43
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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 $67
2011 2012 2013 2014 2015 2015 2016
Cap-Ex
44
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• Clear growth strategy – outstanding execution and momentum
• Positioned like no one else – vertically integrated and innovative
• Respected – global “mega” brand that speaks to health and wellness, and quality and convenience
• Global player
• Commitment to long-term value
Investment Highlights
Strong Foundation Built on Diversification
ULTIMATE health & wellness company45
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APPENDIX
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Appendix – Income Statement
47
in Millions
2011 2012 2013 2014 2015 2015 2016
Net Sales 3,590$ 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