Dole Food Outlk Revised to Pos; S&P Rts New Shelf Debt

Business Wire, August 31, 1998

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 8/28/98-- Standard & Poor's today revised its ratings outlook on Dole Food Co. Inc. to positive from stable.

At the same time, Standard & Poor's assigned its preliminary triple-'B'-minus/double-'B'-plus rating to Dole's $400 million universal shelf filing.

The company's triple-'B'-minus corporate credit and senior unsecured debt ratings were affirmed.

The outlook revision reflects the gradually increasing diversity of Dole's product portfolio and the resulting increase in the stability of the company's operating results.

The ratings are supported by the firm's leadership in the production, marketing, and distribution of fresh fruit and vegetables, as well as by the company's improving financial profile. These factors are partially offset by the high level of risk associated with the global fresh produce industry; operating performance can be impacted by uncontrollable factors such as global supply, political risk, currency swings, weather, and disease. These industry risks are somewhat mitigated by the company's geographic and product diversity within the fresh produce industry. The company's business diversity should be further enhanced by Dole's recent entry into the fresh cut flower industry through the acquisition of four fresh cut flower businesses. While these acquisitions are small, likely to account for about $200 million in annual sales, the acquisitions are expected to be accretive in the first year and should allow Dole to leverage its existing distribution system.

Operating results have improved significantly since 1994 due to Dole's global sourcing capabilities, strong distribution network, and lower debt levels resulting from the application of proceeds from asset sales and the separation of the real estate and resorts business in 1995, as well as internally generated cash. Operating lease-adjusted pretax interest coverage for the 12-month period ended June 1998 was about 3.0 times, about even with 1997, and funds from operation to total debt was about 30%. In the future, Dole is expected to continue to generate discretionary cash flow that will be used for further debt reduction or business reinvestment.

OUTLOOK: POSITIVE

The outlook anticipates that Dole will maintain its strong market position and successfully integrate its recent fresh cut flowers acquisitions. The ratings could be raised in the medium term if the company is able to continue to generate discretionary cash and improve its financial profile.---CreditWire

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