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Executives

David DeLorenzo – President & Chief Executive Officer

Michael Carter – Executive Vice President & General Counsel

Joe Tesoriero – Executive Vice President & Chief Financial Officer

Yoon Hugh – Controller

Beth Potillo – Vice President, Investor Relations & Treasurer

Analysts

Jon Feeney – Janney Montgomery Scott

Ryan Oksenhendler – Merrill Lynch

Heather Jones – BB&T Capital Markets

[Arthur Rolla – Freeport]

Name - Company

Name - Company

Dole Food Company, Inc. (DOLE) Q3 2012 Earnings Call November 15, 2012 4:45 PM ET

Operator

Good day, ladies and gentlemen, and welcome to the Q3 2012 Dole Food Company, Inc. Earnings Conference Call. My name is Karis and I will be your coordinator for today. (Operator instructions.) As a reminder this call is being recorded for replay purposes. And I would now like to hand the call over to your host for today, Ms. Potillo, Vice President and Treasurer. Please proceed.

Beth Potillo

Thank you, Karis. Good afternoon, everyone, and welcome to Dole’s Q3 earnings conference call. On the call today are David DeLorenzo, President and Chief Executive Officer; Michael Carter, General Counsel; Joe Tesoriero, Chief Financial Officer; and Yoon Hugh, Controller.

Earlier today we filed our Q3 Form 10(q) and issued our earning release. The release along with slides to accompany our call are available at www.investors.dole.com and have also been filed on Form 8(k). Today’s call will last approximately one hour. After our prepared remarks we will take questions as time allows.

Some of the information we will discuss with you today contains forward-looking statements about the company’s performance based upon management’s current expectations. Given the risks and uncertainties inherent in our business, actual results may ultimately differ materially from these expectations. Further information on the factors that could affect Dole’s financial results is included in our SEC filings, including Form 10(k), and the forward-looking statements at the beginning of our slide presentation.

Management evaluates and monitors the overall company and segment performance primarily through a number of non-GAAP measures, including EBIT, adjusted EBITDA, and comparable income or loss, total and per share from continuing operations. Some of today’s prepared remarks will include these measures. Information on how we calculate these measures and reconciliations to GAAP financial measures can be found in today’s earnings release and in the appendix of today’s slide presentation.

I would now like to turn the call over to Dave who will discuss our operating performance. Joe will follow up with a discussion of our financial results.

David DeLorenzo

Thank you, Beth. Good afternoon, everyone. I first wanted to update you on the planned sale of Dole’s worldwide Packaged Foods and Asia Fresh businesses to ITOCHU Corporation. We are pleased to say that this transaction is continuing on track including the required regulatory approval process. We do not foresee any issues in obtaining all required regulatory approvals as well as approvals of our shareholders, and remain optimistic that the sale will be completed by the end of the year.

Moving to our Q3 results, today Dole reported Q3 adjusted EBITDA of $62.4 million compared to $61.1 million last year. On Slide 5 we have broken out adjusted EBITDA by the divisions that will remain with Dole and those that are being sold. As you can see, there were significant variances in the results of our different divisions this quarter.

In the Fresh Fruit and Vegetable businesses that are remaining with Dole there was significant improvement in adjusted EBITDA from $23.4 million last year to $45.3 million this year. This was almost entirely due to better results in our European Fresh Fruit operations, primarily as a result of the restructuring efforts we’ve undertaken over the past few years and an improved market.

On the other hand, in our Asia Fresh operations we had a significant downturn in earnings this quarter primarily due to the continued quarantine issue between China and the Philippines. The plant quarantine issue between China and the Philippines was enormously disruptive to the Philippine banana trade during the quarter. The oversupply caused by this issue was further aggravated when the Iranian market also virtually closed down during the quarter following their massive devaluation.

The surplus of bananas from the Philippines spread into all other Asian markets and into the Middle East, which resulted in price declines throughout the region. While it is difficult to prognosticate when things might get back to normal, we are seeing some signs of improvement in Chinese-Philippine trade and are guardedly optimistic that this improving trend will continue into the spring when markets will begin to tighten.

Turning to our Fresh Vegetables segment, you can see that earnings in the quarter declined slightly from $12.4 million last year to $11.8 million this year. Here too we had a few extraordinary items that affected earnings. During the quarter we closed our North Carolina salad plant for seven weeks to perform a complete sanitation and maintenance shutdown following three precautionary recalls from that plant.

While there were no illnesses reported, nor could we or the FDA find any problems in the plant, as a matter of precaution we dismantled the plant, sterilized the equipment and installed new wash lines. The cost of the shutdown and the logistical disruption this caused to our supply chain cost approximately $4.6 million during the quarter. The plant is now fully operational once again.

Secondly, we experienced unusually warm weather during the summer and into the fall along the coast of California, which hurt the quality and the yields of the strawberry crops there. The year-over-year drop in strawberry earnings was over $3 million. Other than those two events, we were pleased with the performance of our Vegetables Group. The Salad business had a good quarter with retail volume and prices up over the previous year and in addition, our commodity Fresh-Packed Vegetable business improved over last year as prices began to normalize from their unusually low prices last year and in the previous quarters this year.

The Packaged Foods Division also performed well during the quarter with Q3 adjusted EBITDA increasing from $32.7 million last year to $37.7 million this year, a 15% increase. This increase was primarily a reflection of the growth of our Frozen business following the successful rollouts of our new Smoothie Shakers and Frozen Fruit Cup products.

In summary, there were obviously a lot of moving parts in the quarter – China, strawberries, and the temporary closing of our North Carolina plant were all unusual occurrences that impacted our results this quarter. Beyond those incidents, the base businesses performed reasonably well in what continues to be a challenging environment in the United States and European food retail.

I would like now to turn over the call to Joe Tesoriero, our CFO, who will provide more details on the financial performance of the company.

Joe Tesoriero

Thank you, Dave. I will now discuss our performance for Q3 2012. As you’re following along on the slides, please refer to Slides 10 through 13 for my remarks. And to begin with I’d like to point out that our US GAAP results include unrealized gains and losses from currency movement, charges for restructuring, and strategic review transaction costs, as well as gains from asset sales. These items are detailed in the reconciliation of adjusted EBITDA to net income in our Q3 earnings release.

Q3 2012 revenues decreased 6% to $2 billion primarily as a result of divestitures of two of our European businesses. Excluding sales of $186 million from these two divestitures as well as sales of $13 million from our berry acquisition, sales increased 2%. Unfavorable foreign currency movements lowered revenues by approximately $32 million.

For the first three quarters of 2012, revenues decreased 7% to $5.3 billion primarily as a result of the divestitures. Excluding sales of $421 million from the divested businesses and sales of $53 million from our berry acquisition, sales were comparable. Unfavorable foreign currency movements lowered revenues by approximately $77 million during the first three quarters of 2012.

Q3 2012 adjusted EBITDA was $62 million as compared to $61 million in 2011. Packaged Foods adjusted EBITDA increased $5 million to $38 million primarily as a result of lower product costs for Packaged Fruit products in North America and improved pricing for Frozen Fruit products. Fresh Vegetables adjusted EBITDA decreased slightly as earnings in the Packaged Salad business were negatively impacted by costs associated with a precautionary recall of a limited number of Packaged Salad products.

Fresh Fruit adjusted EBITDA decreased $7 million due to lower earnings in our North America and Asian banana operations primarily due to lower pricing as well as higher costs in Asia. Disruptions from delays related to the China quarantine regulations impacted markets throughout the Asia region.

For the first three quarters of 2012, adjusted EBITDA was $267 million as compared with $333 million in 2011. Fresh Fruit adjusted EBITDA decreased $69 million to $177 million, mainly due to the absence of the forcedmajeure surcharge and higher fruit costs in North America and Asia.

Packaged Foods adjusted EBITDA was comparable as higher pricing in North America and Asia was offset by higher purchased fruit and tin plate costs experienced during the first half of 2012, and higher marketing expenditures to support new Frozen Fruit products. Fresh Vegetables adjusted EBITDA increased slightly as higher earnings in Packaged Salads and Fresh Berries were partially offset by lower pricing across all major fresh packed vegetables product lines experienced during the first half of 2012.

Gross profit margin, excluding adjustments for unrealized gains and losses on foreign currency and fuel hedges for Q3 increased to 9.0% from 8.5% and for the first three quarters of 2012 decreased to 10.9% from 11.3%. For Q3 2012, selling, marketing, and general and administrative expenses increased to $163 million or 8.3% of revenue as compared with the Q3 2011 expense of $161 million or 7.7% of revenue. The increase was mainly due to higher selling, general and administrative expenses associated with the berry acquisition.

For the first three quarters of 2012, total SMG&A increased to $425 million or 8% of revenue as compared to the first three quarters of 2011’s expense of $416 million or 7.3% of revenue. The increase was due to higher selling and marketing expenses in Fresh Vegetables. Other income or expense/debt for Q3 2012 was an expense of $4.8 million and for the first three quarters of 2012 was an expense of $19 million. Included in other income or expense are a number of items that are eliminated for adjusted EBITDA such as unrealized gains or losses on our long-term Japanese Yen hedges and foreign-denominated instruments.

Interest expense for Q3 2012 decreased 4% to $40 million. The improvement resulted from lower effective borrowing rates due in part to the Q2 2011 maturity of our interest rate swap. In addition, interest expense benefitted from the early retirement in Q3 2011 of $53 million of our 13 7/8 senior secured notes due 2014. For the first three quarters of 2012, interest expense decreased 9% to $102 million.

An income tax benefit of $8 million was recorded in Q3 2012 compared to $100,000 of income tax expense in the prior year. Our tax provision for Q3 2012 benefitted from a lower projected effective tax rate for certain foreign jurisdictions. Income taxes for the first three quarters of 2012 was a benefit of $200,000 compared to $18.7 million of income tax expense in the prior year. Net cash tax payments for the full year of 2012 are estimated to be $19 million, exclusive of any cash taxes that will become payable as a result of the ITOCHU transaction.

US GAAP earnings per share from continuing operations were a loss of $0.16 for Q3 compared with a loss of $0.54 in the prior year. Comparable income from continuing operations, as summarized in Exhibit 2 of today’s earnings release, was a loss of $0.06 per share for Q3 compared with a loss of $0.14 per share in the prior year. For the first three quarters of 2012, comparable income was $0.90 per share compared to $1.40 in the prior year.

Now I’d like to discuss our financial results by segment. During my segment commentary I will refer to adjusted EBITDA by segment.

In our Fresh Fruit segment, Q3 2012 revenues decreased to $1.3 billion from $1.4 billion the prior year. Excluding the Q3 2011 sales from our divested European businesses of about $186 million, Fresh Fruit revenues increased slightly. Approved local pricing in Europe was partially offset by unfavorable Euro and Swedish krona foreign currency exchange movements.

Banana sales decreased slightly due to lower sales in North America and Asia. Fresh pineapple sales increased primarily due to higher volumes in North America. Revenues in Asia for other fresh fruit increased due to higher pricing. Sales of Chilean deciduous fruit increased as a result of higher pricing for apples and grapes and higher volumes of kiwi. Net unfavorable foreign currency exchange movements in our foreign selling locations decreased Fresh Fruit revenues in Q3 by approximately $31 million.

For the first three quarters of 2012, Fresh Fruit revenues decreased to $3.5 billion from $4 billion the prior year. About $421 million of the decrease was attributable to the European divestitures. The remaining decrease was a result of lower pricing in North America and lower Fresh Fruit volumes sold in Europe, as well as unfavorable Euro and Swedish krona foreign currency exchange movements. These factors were partially offset by higher volumes of fresh pineapples sold worldwide and bananas sold in Asia. Net unfavorable foreign currency exchange movements in our foreign selling locations increased Fresh Fruit revenues in the first three quarters by approximately $74 million.

Fresh Fruit adjusted EBITDA for Q3 2012 decreased $7 million to $25 million. Banana earnings decreased primarily as a result of the impact of the China quarantine issued on all of the Asian markets. In addition banana pricing was lower in North America due to the absence of the force majeure surcharge. These factors were partially offset by lower shipping and fruit costs in Europe which benefitted from our restructuring initiatives. Fresh pineapple’s EBIT increased primarily due to lower fruit and shipping costs. EBIT in the Chilean deciduous fruit operations increased primarily as a result of higher pricing.

For the first three quarters of 2012, Fresh Fruit adjusted EBITDA decreased $69 million to $177 million. Banana earnings decreased primarily due to the absence of the force majeure surcharge in North America and the China quarantine issue. These factors were partially offset by lower shipping costs in Europe which benefited from our restructuring efforts. Earnings in Chilean deciduous fruit and North America fresh pineapples increased primarily due to the same factors that impacted earnings during Q3.

Turning to our Fresh Vegetables segment, Q3 revenue increased 10% to $327 million from $297 million in 2011. Improved prices for celery and higher prices and volume for iceberg drove a 17% increase in Fresh Packed Vegetables. Fresh Berries’ revenue increased 17% as a result of increased sales associated with the berry acquisition, which was partially offset by weaker performance in our legacy strawberry business. Packaged Salads revenue increased 5% as a result of improved pricing.

And for the first three quarters of 2012 Fresh Vegetables revenue increased 8% to $851 million from $787 million. The improvement was mainly driven by the Berry business where our blueberry acquisition and higher sales in legacy strawberries accounted for a 40% increase in sales. Higher pricing drove a 4% increase in Packaged Salads revenue which was partially offset by lower pricing of Fresh Packed Vegetables across all major product lines.

Fresh Vegetables’ adjusted EBITDA for Q3 2012 decreased slightly to $11.8 million. During the quarter, our Packaged Salad earnings were negatively impacted by $4.6 million of costs related to the precautionary recall of a limited number of Packaged Salad products. Without these extraordinary costs, Vegetable earnings would have been up $4 million in the quarter versus last year. Fresh Berry earnings decreased as a result of higher growing and packing costs partially offset by improved pricing for strawberries. Fresh Packed Vegetable earnings were higher due to improved pricing for iceberg lettuce and celery.

For the first three quarters of 2012, Fresh Vegetables’ adjusted EBITDA increased $2 million to $42 million. Earnings increased in Packaged Salads as a result of improved pricing and lower product costs due in part to product efficiencies, partially offset by higher selling, marketing, and general and administrative expenses. Fresh Berries’ earnings improved due to earnings from the berry acquisition partially offset by higher growing costs. These factors were partially offset by the extraordinary costs associated with the Q3 precautionary recalls as well as lower pricing across all major Fresh Packed Vegetable product lines during the first half of 2012.

In our Packaged Foods segment, Q3 2012 revenues increased 3% to $376 million from $366 million in the prior year. The increase was primarily driven by higher sales in our Frozen Fruit and Healthy Snack businesses. These improvements were partially offset by lower volumes of Packaged Fruit products sold in North America and lower pricing in Asia. For the first three quarters of 2012, Packaged Foods’ revenue increased 3% to $934 million from $903 million. The improvement was attributable to the same factors that impacted Q3.

Packaged Foods’ adjusted EBITDA for Q3 2012 increased $5 million to $38 million from $33 million in the prior year. Earnings increased primarily due to higher pricing and lower slotting fees for Frozen Fruit products as well as lower product costs for Packaged Fruit Products, partially offset by lower pricing in Asia. For the first three quarters of 2012, Packaged Foods’ adjusted EBITDA was $82 million compared with $84 million in the prior year. Higher purchased fruit and tin plate costs experienced during the first half of 2012 were partially offset by improved pricing of fruit bowls and canned pineapple juice in North America and other Packaged Fruit products in Asia.

I will now discuss some key balance sheet and cash metrics. Total net debt at the end of Q3 2012 was approximately $1.61 billion. There was $76.6 million outstanding under our ABL revolver. After taking into account approximately $158 million of outstanding letters of credit issued under the ABL we had revolver availability of $98.5 million.

Cash flows provided by operating activities in the first three quarters of 2012 was $44 million compared to $39 million in the first three quarters of 2011. The change was primarily related to lower inventory spending as prior year reflected increased inventory levels to support new products, partially offset by lower levels of accounts payable and higher levels of receivable due to timing.

Capital expenditures for the first three quarters of 2012 were $59 million compared to $43 million in the prior year. We estimate that capital additions for 2012 will approximate $110 million. Asset sales for the first three quarters were $37 million and we continue to target asset sales of $50 million for the full year.

We continue our hedging programs for currency and bunker fuel. For 2012 we have hedged approximately 50% of our net Euro cash flow at an average rate of $1.38 per Euro as compared with the current spot rate of $1.28. In our Packaged Foods Division we have hedged 50% of our Philippine peso exposure at 43 pesos to the dollar, as compared with the current spot rate of 41.1; and 75% of our Thai baht exposure at an average rate of 31 baht to the dollar as compared with the current spot of 30.7. All of our 2012 foreign currency hedges are forward contract. And for 2013 we have hedged approximately 25% of our net Euro cash flow at an average rate of $1.28 per Euro using participating forwards.

For the first three quarters of 2012, our fuel hedges benefited adjusted EBITDA by $1.6 million. For the last quarter of 2012, about half of our European requirements are hedged at an average swap rate of $562 per metric ton as compared with the current spot rate of $589 per metric ton. At the current spot rate our Q4 fuel hedges would benefit adjusted EBITDA by approximately $200,000. And for 2013, about 30% of our European requirements are hedged at an average swap rate of $565 per metric ton as compared with the current spot rate of $589 per metric ton.

That concludes our prepared remarks and we will now open the call for questions.

Question-and-Answer Session

Operator

(Operator instructions.) And your first question comes from the line of Jon Feeney with Janney. Please proceed.

Jon Feeney – Janney Montgomery Scott

Good afternoon, thank you very much. The first question I had is on bananas, it seems like an odd disconnect that’s going on. I know it’s really your Fresh Fruit business that you gave us numbers, but you commented on bananas and it seems like the pricing environment is strong in Europe but yet weak in the US. How much of that will be with us in the US after we lap the effect of the surcharge; like say if the surcharge weren’t there? And historically European pricing has been a leading indicator I think of where the annual price in the US is going to tend to trend – do you think that’s true this time as far as what you’ve seen in supply and demand?

David DeLorenzo

Jon, can you just repeat that last sentence? I think I missed the last thing you said.

Jon Feeney – Janney Montgomery Scott

Sure. I said ordinarily Europe is a leading indicator of the United States, so if Europe pricing is stronger then that’s going to tend to indicate a firming direction of the annually renewing contracts of the US. Is that the case this time do you think from what you see today?

David DeLorenzo

That’s kind of always the $64 question at this time of year. I think that when we look at it, you’re right that the production side of the business and the supply side of the industry is down and it’ll go into next year we believe, down from last year. So there should be a tight market going from the supply side for all the reasons I think we’ve talked about. On the demand side, Europe has been better in terms of pricing this fall and continues to be so we would expect a good European market next year, so that’s going into next year.

When it comes to North America it’s difficult to predict because North America is still suffering the recession. The retailers are very, very price-sensitive. I think we all agree that bananas at retail are way too low and that prices have to come up but the sensitivity of the consumers is really difficult right now with the retailers, and whether they can adjust prices or are willing to adjust prices, or the industry can get the increases really remains to be seen.

There’s no question that the industry is in a position, or should be having higher prices because the industry needs it. We’ve got millions of people that are suffering in the banana industry in Latin America and a couple of cents a pound would mean the world to the industry. But there is tremendous resistance and the United States market does remain very competitive. So I’d say at this point it’s still a little early to say and we’re kind of very early in the contract season.

Jon Feeney – Janney Montgomery Scott

Thanks. And just a follow-up question for Joe, you said $110 million in capital additions. Was that a 2012 number, and I think if so for 2013 in standalone Fresh Fruit operations, what do you expect ongoing capital expenditures to be? Can you update us?

Joe Tesoriero

Yeah, it was a 2012 number and at this point we would estimate about half of that for 2013 post the ITOCHU transaction.

Jon Feeney – Janney Montgomery Scott

That’s helpful. And any update on the, it seems like it’s a little bit better real estate market out there and there’s been obviously a couple asset sales including yours but in Hawaii. Any update on that non-operating line in Hawaii?

Joe Tesoriero

Well overall, we’re now up to $37 million in non-core asset sales in the year, so we’ve ticked up since the end of Q2. There are future transactions that we’re still working on that have the potential of closing this year, but I would say overall it continues to be relatively slow in the Hawaii market.

Jon Feeney – Janney Montgomery Scott

Great, thank you. I appreciate it.

David DeLorenzo

Thanks, Jon.

Operator

Your next question comes from the line of Ryan Oksenhendler with Merrill Lynch. Please proceed.

Ryan Oksenhendler – Merrill Lynch

Hey, good afternoon guys. I guess just to follow up on Jon’s question in terms of pricing in North America, what would it take to get pricing higher? Because it seems like supplies are already pretty tight.

David DeLorenzo

Well, I guess the way I look at it is it’s always a negotiation and at some point they will bounce up. What we’ve found in the business is that pricing is almost like a step function; it’s kind of a cord that gets tighter and tighter. So prices have kept relatively flat to even down a little bit in the United States for the last few years; costs have been going up – and that’s not completely unusual historically. Then at some point in time either the supply situation breaks or there’s a demand breakthrough that would cause kind of a step function up so it’s never quite a straight line.

There’s no question that it will be going up at some point. It’s just hard to say if this is the drop year or not but I think we’re getting close to that point where prices have to go up. Whether they will or not is what is just kind of a question mark at this time.

Ryan Oksenhendler – Merrill Lynch

Okay. And the moving to Fresh Vegetables, can you talk about how much longer will the higher sourcing costs for strawberries be in the chute? Is that something that will stick around for the next couple of quarters?

David DeLorenzo

No, we think that the weather is kind of behind us, it’s kind of normalized in the last week or two anyway, if you can call that normal. We’re starting to get the cold nights again; we’ve moved down to [Oxinard]. So I think that we should see a more normalized quarter going from here on out.

Ryan Oksenhendler – Merrill Lynch

Got it. And are there any lingering impacts in Q4 with regards to the recall for Packaged Salads?

David DeLorenzo

No, that was just really more of the plant shutdowns and the disruption in the supply chain. So that’s all behind us, too – we’re all normalized again.

Ryan Oksenhendler – Merrill Lynch

Got it. And then just the last question: as we get closer to hopefully closing the acquisition, the divestiture here, can you talk about I guess your use of cash flow going forward – maybe rank in order in terms of your priorities?

David DeLorenzo

Well, probably not exactly with you right now. Right now we’re working on, as you know with the cash flows within the businesses, we want to strengthen those in the businesses. We know all the options that are available to us but I think that we’re completely focused on getting this transaction done and up and running; and then I think we can turn with a little more time to decide on the exact measures that we might take with the cash flow. But right now we’re really concentrating on just getting the transition done effectively.

Ryan Oksenhendler – Merrill Lynch

Alright, thanks guys.

David DeLorenzo

Thank you.

Operator

Your next question comes from the line of Heather Jones with BB&T Capital Markets. Please proceed.

Heather Jones – BB&T Capital Markets

Hello. First I guess I was wondering the impact from the China/Philippines issue was greater than expected for the quarter, and the slide where you broke out your continuing business from the businesses you’ll be divesting was very helpful. I was wondering if you could give us a sense of what that would look like year-to-date, because clearly Asia [pressure] was a big drag on the segment for Q3 and it sounds like that drag accelerated throughout the year. But was it a pretty hefty drag for the first two quarters of the year as well?

David DeLorenzo

No, I think that it really started toward the end of Q2. If I’m not mistaken there might have been about $4 million dropped in Q2 because of that but really it was just starting toward the end of Q2. And it’s really a Q3 disruption, and really much bigger in Q3 than any other quarter because that’s where we’re really caught with disposing fruit and moving containers. There was a lot of just one-time problems on top of just the market.

Heather Jones – BB&T Capital Markets

And has Iran improved at all?

David DeLorenzo

Not that I know of. We’re not really big in Iran but the markets over there are still – we’re not in Iran I guess but the markets are still quite weak.

Heather Jones – BB&T Capital Markets

I think you had mentioned Iran in your comments relative to the market for Philippine bananas so you have issues, not you but the industry has issues with China, Iran.

David DeLorenzo

Yes, you’re right and as far as I know there’s still very little if any fruit getting into Iran.

Heather Jones – BB&T Capital Markets

Okay. And your $50 million savings that you announced when you announced the divestiture, I’m just wondering if now that we’re – I don’t even know, a couple of months closer to the closing of that, do you have more clarity as to the timing of how that’s going to roll through; when we should start to see the beginning and when we’ll get to an annualized run rate?

David DeLorenzo

I think we’ll give you continual updates, but kind of going back to what we were targeting; I think for your modeling for next year we’re targeting that we should be able to bring in about $20 million to $25 million in savings next year in a full run rate. And most of that is just the G&A, the corporate-type of G&A that we’ve identified and can be done very close to or during the transition right up front. The other operational savings which also get into the consolidation of the businesses we’re still working on, and we’ve said that we would work on those through 2013 and get up to a full run rate probably in 2014 – but those are, as I say as we get into the next quarter and the quarter after we can give you better visibility on that.

Heather Jones – BB&T Capital Markets

And on the $20 million to $25 million on the corporate G&A side, I just want to make sure I’m clear – you intend to realize $20 million to $25 million of savings in 2013 or that’s the run rate you’ll be at when you exit 2013?

David DeLorenzo

Yeah, we think we should be able to get that in 2013.

Heather Jones – BB&T Capital Markets

Okay. And not to beat a dead horse, but going back to this North American issue; and to your point, you’ve made the point that the costs are moving up. Shipping costs have been better behaved over the last few years, but fruit costs continue to move up and we’re hearing reports that they’re likely to move higher again next year. And you know, then we’re looking at Ecuador that’s got a huge swath of production that’s down; we’re hearing reports of producers next year planning to take some pretty significant acreage out of bananas and put it into other crops. And so I’m sitting here thinking that this looks like the producers, the multinationals have more leverage now than they’ve had for quite some time. I’m just wondering, and I just want to speak about Dole specifically – given that the legacy business you’re going to be left with is Europe and US, and Europe tends to be unpredictable while the US seems to be more controllable, if you are moving towards a position where you’d be willing to walk away from business if you don’t get the pricing you need?

David DeLorenzo

I think we always kind of feel that that should be our position in every negotiation. But you know, one of the difficulties with the business that the whole industry suffers is one, you’ve got a high concentration of retailers now, and two, the business has a very large component of fixed costs in the supply chain. So everybody tends to weigh the fixed costs against the variable costs, and that’s what kind of keeps pressure on these pricings longer than really they should be because it’s difficult to operate. The cost of operating with empty ships is very costly, so there does tend to be a little bit of weakness on the supply side – more weakness than you would expect.

And what you’re indicating is absolutely right. The industry is in a position and has a need for price increase, but whether it’ll actually take place I don’t know. Hopefully Dole continues to take and has taken a leadership position in what needs to be done, but you do have all of these pressures and dynamics at work and it’s very difficult to predict.

Heather Jones – BB&T Capital Markets

I have a follow-up to that question, and this is my last question – and this may not even affect 2013 but just in a broader perspective, again to the idea of taking back leverage from the retailers. I know that you own a fair amount of your ships and I believe another large component are longer-term leases. So those ships that are maybe on shorter-term leases, would it make sense at some point to potentially reduce production on your own farms so it couldn’t go into the hands of others; and take a ship out of rotation just to take back leverage to be able to get the pricing that the product requires? And again, I know this isn’t something that can be done in ’12 or ’13 but just a broader, almost a philosophical question.

David DeLorenzo

Yes, we always look at all of those options, Heather, and I think they’re always in our mind and our table. I think all the companies probably do. But at the end of the day I think that there will be something macroeconomic within the industry that’ll cause the prices to go up because at some point in time the supply or the demand will dictate that. But yes, we always look at every option in every market on every route, so we will look at every option, yes.

Heather Jones – BB&T Capital Markets

Okay, thank you very much.

David DeLorenzo

Okay, thank you.

Operator

And your next question comes from the line of [Arthur Rolla with Freeport]. Please proceed.

[Arthur Rolla – Freeport]

Hey guys, thanks for taking my call. I have a couple questions. First, can you tell us what the revenue was roughly in Q3 for New Dole versus Q3 2011?

Joe Tesoriero

Yes we can but I’ve got to look it up for a second.

Beth Potillo

Art, I’ll get back to you on that; I don’t have it handy.

[Arthur Rolla – Freeport]

Okay. I was also going to ask three quarters for New Co. for revenue and EBITDA but I guess if you don’t have Q3 you probably don’t have that. So I’ll call you offline I guess for it.

Beth Potillo

Okay.

[Arthur Rolla – Freeport]

My other question would be on the Yen swap liability, I see the Yen finally starting to weaken after 30 years of appreciating. So I was wondering what kind of impact that has because I know you guys were contemplating settling that up post-deal close.

Joe Tresoriero

It’s Joe. We’re keeping our eye on that for sure. I mean (inaudible) the proceeds, some of the proceeds to take out part of that Yen swap is an option, but if we see signs that the Yen is continuing to weaken… It really hasn’t weakened all that much. It’s still [70 on the line], so we’re evaluating that, Art, for sure; and as well taking some of it out with some of the proceeds from this transaction.

[Arthur Rolla – Freeport]

And have you guys, and I think someone else asked this, philosophically thought about, you know, assuming this transaction closes in the next six weeks and looking at your balance sheet pro forma for that you’re going to be probably close to a net cash position and have a [diminuous] amount of debt, and kind of have a business with cash flowing in the $140 million to $160 million range going forward versus a very low equity base today. Have you thought “Hey, maybe we’ll take two turns of leverage in the bank debt market and pay out like a $5 per share stock special dividend, and perhaps maybe pay a 50% free cash flow dividend with the equity which would then be around 8%; and then use the other 50% a year free cash flow to make [bolt] on acquisitions and do whatever reinvesting you need in the business?”

David DeLorenzo

I think you’re getting a little bit ahead of us on that one. We’re still as I said trying to make sure that the transition goes smoothly, that the new company gets off to a very good first start, a fresh start; and then we can look at different things and zero in on what really the opportunities are to grow that business, where the investment opportunities are, where the real cash flow is because we still have to get this thing separated out and get it done. So I think we really don’t have any concrete plans that we can talk about.

[Arthur Rolla – Freeport]

Of course. Thank you very much, and I’ll call you, Beth, on the New Co. financials. Thank you.

Beth Potillo

Okay.

Operator

And at this time there are no further questions in queue.

David DeLorenzo

Okay, well I want to thank everybody for being on. We appreciate it. We’ll talk to you next quarter, thank you.

Operator

And ladies and gentlemen, that does conclude today’s conference. Thank you for your participation. You may now disconnect and have a wonderful day.

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