Fresh Del Monte Produce Inc (FDP) 2002 Q4 法說會逐字稿

Ladies and gentlemen, good morning. My name is Brett Bowker, and I will be your conference facilitator today.

Please note that today's call is being recorded.

At this time, I would like to welcome everyone to Fresh Del Monte Produce's fourth quarter 2002 and year-end earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If would you like to ask a question during that time, simply press star, then the number one on your touch-tone phone. If you would like to withdraw your question, press the pound key.

I will now turn the call over to Ms. Christine Cannella. Ms. Cannella, you may begin.

Thank you, Brett, and good morning, everyone, and welcome to Fresh Del Monte's fourth quarter 2002 and year-end conference call. I am Christine Cannella, Director of Investor Relations and Corporate Communications. I am joined today by Chairman and Chief Executive Officer Mohammad Abu-Ghazaleh and Executive Vice President and Chief Financial Officer John Inserra, who will discuss our results for the quarter and year ended December 27, 2002.

We released our results this morning via business wire, e-mail and First Call. If you have not received a copy of the earnings release, please contact Fresh Del Monte investor relations at 305-520-8451. You may also visit our Web site at freshdelmonte.com to register for future distributions.

This conference call is also being Webcast live at our Web site and will be available for replay approximately two hours after the conclusion of this call. Please feel free to contact me directly with questions. Again, my number is 305-520-8451.

This morning Mohammad will review our operating performance during the quarter and the year, along with recent developments and our outlook, and John will review our financial performance. As always, at the conclusion of this presentation, they will be happy to take your questions.

Before we turn the call over to Mohammad, please let me remind you that much of the information we will discuss this morning, including the answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters. These forward-looking statements are intended to fall within the Safe Harbor provisions of the securities laws. Our actual results may differ materially from those in the forward-looking statements as a result of various factors, including those described under the heading "Description of Business Risk Factors" in the company's Form 20-F for the year ended December 28, 2001.

I would also like to add that this call is the property of Fresh Del Monte Produce. Redistribution, retransmission, or rebroadcast of this call in any form, without our written consent, is strictly prohibited.

With that, please allow me to turn the call over to Mr. Mohammad Abu-Ghazaleh - Mohammad.

Thank you, Christine, and good morning, everybody. I am pleased to report another quarter and another year of record financial and operating performance at Fresh Del Monte Produce. For the quarter, net sales rose 65 million to 487 million. Net income increased 30 million to 35 million. Earnings per share increased to 62 cents per diluted share from 10 cents in the fourth quarter of last year. Included in the fourth quarter 2002 net income is a 7-cent per share gain net of taxes on the sale of the company's interest in a small (inaudible) distributor.

For the year, net sales rose $163 million to $2.1 billion from $1.9 billion at year end 2001. Net income increased $99 million to $195 million compared with $96 million in 2001. Gross profits rose by $54 million to $337 million for the year compared with $283 million in 2001. Earnings per share increased to $3.45 from $1.77 a year ago. These results were driven by improved performance across our entire product line.

We continue to strengthen our financial position during the quarter and throughout the year. We further reduced our debt levels in the fourth quarter of 2002 by year end. Our debt to equity ratio declined to 10%, a significant degree, from 38% at the end of 2001. This is particularly noteworthy because we still invested in expanding our distribution network, strengthening our fresh cut operations, and investing in the systems that drive our operating efficiencies. During the year, our operating cash flow also continued to grow, reaching $307 million at year-end 2002, up from $230 million at the end of 2001.

Let's turn now to our global banana business. As we anticipated, banana prices in Asia increased significantly during the year. Pricing in Europe also rose, while pricing in North America softened slightly. I would like to remind investors to maintain a global view of banana pricing. Investors should not interpret temporary pricing weakness in a given market as a signal that global prices are trending downward or that our bottom line will be impacted over the long-term.

Our flagship Del Monte Gold Extra Sweet Pineapple continued to perform well during the quarter, just as it did throughout the entire year. We are pleased these premium pineapple has created loyalty among our retail grocery shoppers. Investors sometimes ask whether we are feeling a domestic squeeze from the many large and small growers that are attempting to capitalize on Del Monte Gold Extra Sweet's success. We are aware that are competitors are trying to establish a firm position in this category, but we have seen little evidence of a competitive impact. In fact, demand for our product is on the rise, with our sales volume for 2002 increasing 14%. Pricing for the product has also remained strong.

It is also worthwhile to remember that much of our excellent financial performance over the last several years has been due to our success in increasing efficiencies across all product lines, not just pineapple. For example, our performance in the melon category improved during 2002. This is attributable to the expansion of our melon program in North America and Brazil.

During the quarter, we continued to restructure our UK Fresh Cut operations, consolidating this business to reduce overhead, increase efficiencies, improve margins, and streamline operations. We are satisfied that we are making good progress in terms of integration, and we are working diligently for the upcoming new product launches.

During the year, we also continued to expand our global integrated distribution center network, opening a new DC in Hong Kong and two in North America. At the same time, we continue to drive efficiencies in our logistics operations, preparing to launch our I2 (ph) system in March '03. I2 is a software-based logistics system that will increase efficiencies in our air-land (ph) transportation network.

We are pleased with our recent Dallas-based fruit and vegetable acquisition, and let me repeat again, extremely pleased. One of the nation's largest repackers (ph) of tomatoes, potatoes, and onions, among other things. We expect this highly strategic acquisition to advance our diversification strategy, expand our product mix for existing and prospective grocery and food service customers, accelerate our North American expansion, further enhance our logistics program and expanded value-added services we offer our customers.

Over the last few years, our growth focus has been on North America, and will continue to expand in this region. Our strategy is to focus now on driving similar growth in central and northern Europe. In terms of the outlook, we also expect 2003 earnings to outpace our strong performance in 2002.

At this point, I would like to turn it over to John to give you some financial highlights.

Thank you, Mohammad. And we are very pleased with Del Monte's record performance for the fourth quarter and the entire year. As Mohammad said, we achieved across the board improvement in net sales, net incomes, and EPS in the fourth quarter of 2002 and on a full-year basis. Net income was driven by a significant increase in gross profit, decreases in interest expense, favorable foreign exchange gains, a gain on the sale of the company's interest in its north European distribution, and lower taxes. Gross profit was up for the year by 19% due to higher volume and net sales, a strong euro, and continued cost reduction throughout our product line.

Let's discuss -- let's direct our attention to our cash flow and balance sheet. Operating cash flow increased to $307 million for the year, a substantial increase over 2001, as debt declined to $87 million at year-end 2002. As Mohammad said, this represents a debt to equity ratio of 10%, which is an all-time low for the company.

Also at year-end, we had only $25 million outstanding on our credit facility. Of course, those numbers have changed since year-end due to the $100 million cash acquisition of the Dallas-based fruit and vegetable company, which we announced two weeks ago. It's clear that our healthy cash flow and lower debt level position positions us extremely well to make other acquisitions. I might mention that we did not acquire any existing debt with the Dallas acquisition.

Net sales benefited from foreign exchange gains of $13 million during the quarter, and by $15 million for the year, primarily as a result of the strong euro. In line with our policy, we are currently partially hedged for our foreign currency net sales exposure in 2003.

Net sales of bananas during the quarter rose $29 million to $227 million, driven by increases in volume and improved pricing in Europe and Asia. Quarterly gross profit was down slightly due to lower North American banana prices, together with increased fuel and container board pricing. Worldwide banana prices averaged $8.88 per box for the quarter. For the full year, banana net sales were up 7% due to strong banana pricing in Europe and Asia, along with increased volume in North America and Europe. For the year, worldwide banana prices averaged $9.60 per box. Bananas represent 46% of total net sales for 20002.

In our other fresh produce segment, net sales for the quarter rose 19% to $235 million due to a 6% increase in volume and strong pricing. Gross profit increased $16 million or 36% as a result of higher net sales and reduced product course (ph). On a full-year basis, other fresh produce, net sales increased 11% to $1 billion, with gross profit in the other fresh produce segment increasing 43 million or 21% year over year. Our pineapple business continues to perform very well, with net sales and gross profit for the fourth quarter increasing 15% and 7% respectively over the fourth quarter of 2001. For the full year, pineapple sales and gross profit increased 10% and 9% respectively as a result of increased volume in our Del Monte Gold Extra Sweet Pineapple and continued strong pricing.

Melons continued to perform well in the fourth quarter and for the full year, with significant increases in volume, net sales, and gross profits. We also continued to expand our grape business in 2001. Net sales increased 10% over the prior year, driven by a 16% increase in volume.

Our Fresh Cut fruit and vegetable line continued to grow during the quarter and throughout the year. Fresh Cut net sales rose by 29 million during the quarter compared with the prior year. Fresh Cut sales represent 10% of the company's total sales in the fourth quarter. For the full year, we doubled our Fresh Cut net sales from 75 million to 147 million. The increase in net sales in the fourth quarter and full year was primarily due to the UK acquisition and the continued growth of our North American Fresh Cut business.

In our non-tropical category, for the quarter and full year, volume was slightly lower, with an increase in gross profit due to higher pricing in stone (ph) fruit and apples and lower costs in all our non-tropical products. In our North America integrated distribution network, net sales increased $32 million to $179 million compared with $147 million for the same period last year. In 2002, 18% of North America's products were passed through our 17 integrated distribution centers in this region. With our recent Dallas acquisition, we have a total of 22 distribution centers in North America, adding an additional $300 million to sales before any integration. As expected, the non-produce category represented 5% of total sales for the quarter and full year.

You should also note that we took an asset impairment charge of $2.4 million for the quarter to account for the flooding in Costa Rica and difficult operating conditions in South America, bringing our total asset impairment charge to $12.6 million for 2002. The company is filing insurance claims for the Costa Rica flood loss.

On a full-year basis, SG&A increased $13 million, primarily as a result of our UK acquisition, together with increased expenses associated with our business expansion. Interest expense decreased by $16 million from the prior year as a result of lower interest rates and reduced outstanding debt. Other income for the full year increased $533 million due to foreign exchange gains from the euro and gain on the sale of the company's interest in its northern European distributor. Lower tax expense in 2002 is due to increased earnings in jurisdiction with lower tax rates.

I would like to turn the call over to Brent for the question and answer session - Brent.

If you would like to ask a question or make a comment, as previously mentioned, you may signal us by pressing the star key, followed by the digit one on your telephone keypad. Once again, press star one on your telephone keypad if you would like to ask a question or make a comment. We will pause for a moment to assemble our roster.

And once again, it's star one if you would like to ask a question or make a comment.

Our first question comes from Terry Bivens with Bear Stearns.

Good morning, everyone.

Good morning, Terry.

Congratulations on another strong quarter. I guess -- Mohammad, you mentioned, just in terms of looking at 2003, you do believe that the results will be better than '02 but, you know, you guys are beating the quarters by such margins -- I guess every company should have this problem -- but you're beating them by such margins that it's kind of tough to figure out what the business is going to do. Can you be a little bit more specific? I mean, are we looking next year at a $4 number, do you think, for this year?

Don't be too aggressive. This is a business like any other business, and we do -- definitely part of the business has been driven by very good conditions in terms of the production, in terms of the market. Many, many variables are in place. However, it's driven by another factor, which is the efficiencies and the performance of the operation itself.

Don't forget that, during the last three years, or I would say in the last four years, we have been really laying the groundwork for building the infrastructure and making the platform ready for this growth that you have seen during -- especially during 2001 and 2002. And the performance and improvements that you have seen over the last two years, actually a product of all these investments and hard work that we have been putting in place, through distribution centers, through Fresh Cut, through more efficiencies, better logistics, diversification, all these work together.

Now, we are continuing this growth and continuing this, let's say, direction. One of the major, I think, things that we have to look at is, the last acquisition we did a few weeks ago, and this, in my opinion, is taking us into a new level in our business. Our -- and this is something that I would like everybody to understand. Our objective and our philosophy is to bring the company to a point where we are not dependent on cyclical commodities, where we will be a more stable income, let's say, company.

Hopefully within the year, two years, you will see a different image of Fresh Del Monte that we are -- will be still in the produce, but we will be a more, let's say, predictable and more fixed kind of income that -- as we go forward in the years. You know, I can (inaudible) this more maybe on the future when I go on road shows, but this is how we look at the company as we go forward.

Now, you want me to give you a figure for this year, $4 or -- we said we will do better than this year, but I cannot tell you how much because we are only in February, and we still have almost 11 months to cover. So it would be unfair for me or for you to give a prediction which is, you know, too far in the future.

Just with regard to pricing -- you know, our spot pricing survey showed that you're up pretty strongly in the North American market. How are you looking at pricing on bananas in a global manner and on pineapples as we move through the year? What is your view on that at this point?

As we look now, the Far East has improved significantly in the last few weeks. And still we believe it's going to improve further as we go through the first half of the year -- hopefully for the whole year. North America, as you mentioned, it's improved year over year. I mean, if you look at the average pricing, we have better pricing than last year, same time. Europe also has improved significantly during the last, I would say, six weeks, since the beginning of the year.

And we believe that once the weather and the climate improves in Europe, which has been very adverse during the last few weeks, with snow storms and others, I think that even the market will improve further.

I believe -- I believe that the market for bananas will continue to be more stable than the past. I mean, we will see a more stable market where we believe that we will have a more -- a decent pricing as we go down the road.

As far as pineapples are concerned, as I mentioned a few minutes ago, Terry, we are confident of our pricing, and we are confident of our volumes. You know, we just -- during the last three years, we started planting in Brazil, which is a completely new project for us. We will start cropping by -- hopefully by towards the end of this year and start selling in the local markets as well. This is going to be another additional, you know, source of income that we have not yet actually, you know, obtained before.

So we are working on many plans at this time. And I think, you know, in Brazil, we have huge opportunities because, with the banana plantations, we are the only multinational that grows bananas in this country with a first class quality, and in the industry, as far as quality is concerned. As far as melons, we are the only multinational that grows melons in a very sizable volume. As far as Del Monte goes, we will be producing (inaudible) volumes by the end of the year, and I believe that this is going to be an additional plus for us.

So all in all, we believe that, with our Del Monte Gold, we have a very strong position. And as I mentioned, always, competition is trying, and we keep trying to, you know, to put a place (ph) in the marked. And this is a free market, and everybody has the right to sell and to grow and to make his best efforts. However, we at Del Monte believe that we have the best product in the market, we have the most consistency in volumes, and we have the best customer list anywhere you go.

So we have proved over the last several years that we grow the volume and we still keep even (ph) rising the prices. So this is a testament for what we have been saying. And I hope that, you know, this can come to rest because we have been saying this for the last so many years. It seems people are still worried. We are not worried ourselves, and we believe that we will maintain our position.

OK. Well, thank you for that. I just have one quick one for John.

John, in the other line, how much was pretax on that gain of the north Europe, and what was the rest of that other income?

The gain was $9 million, and -- on the other income line, and foreign exchange was a significant part of the remaining portion of that -- piece of that.

Very good. Thank you all, and congrats again on the quarter.

Thank you.

Up next, we'll go to Eric Larson with Piper Jaffray.

Hi. It's Mitch Kaiser (ph) for Eric. Great quarter, guys. That's wonderful.

Thank you.

Quick question. On fourth quarter, how much did the UK Fresh Cut operations add to revenues? Do you know that number?.

It added about 20 million to 25 million in the fourth quarter, the UK operations.

Then, just a point of clarification on the pineapples in Brazil, are those Del Monte Gold as well?

Yes.

That's all I had. Thanks a lot, and congratulations.

Thank you, Eric.

Up next, we go to Merrill Lynch's Diane Geissler.

Hi, guys. Great quarter. Just a couple of quick questions for you. Can you bring us up to date on where you stand with the lawsuits that have sort of been out there over the last few months? Any further comment?

This lawsuit, I cannot comment on it under legal terms. You know, I will leave this to the lawyers. However, I would like to make a comment here, and - as far as the lawsuit, I am as sure about the -- it's a baseless and meritless lawsuit, as much as I am sure about my name. So I think that can explain where we stand on this lawsuit. We believe it's frivolous, it doesn't have any merit, and we will defend it vigorously.

OK, fair enough. On the DCs, I know you have been rolling them out in North America. Can you tell me where you stand in terms of how many more you have to add? And you're looking toward Europe, or both, I would guess suitable acquisitions, but also a DC strategy. Is that -- am I hearing you correctly?

Yes, you are very right on that. We probably will be looking around two to three more DCs maybe during the year, and I think by that time -- by that, we would be able to cover the whole country. Of course, if we get any acquisitions, it would be in the more diversified line, as well as the added value services that would come along with them.

Well, I guess the second part of my question really is, are you going to roll the strategy of the DCs out in Europe as well?

Most probably, yes. We haven't yet. We will. We have a strategy, but I cannot discuss it here on the conference call. But you will see -- we will see expansion in Europe as we go forward in the near future.

OK. And just one quick question for John. Can you tell us how to think about the tax rate going forward? I know it's historically been one of those difficult things to estimate, but how should we look at it in terms of -- for 2003?

Well, we think that the tax rate probably will be similar to this year. We will have additional taxes through -- due to the recent acquisition, which is a U.S.-based business, so that will redirect some more taxes into the U.S. But I believe that the, you know, total tax expense, which should be in line with this year

Thank you very much.

And moving on, we will go to Heather Jones with BB&T Capital Markets.

Thank you. Looking at foreign exchange - just a quick question -- you said $13 million impact for the quarter. Was that just revenue, or was that including the impact on the other income line?

No, that was -- the sales line was $13 million, and I believe I said $15 million on a full-year basis on the sales line.

OK. Now, the Gold -- I think you said Gold sales volume, were Gold volumes up 15% in the fourth quarter, or Gold sales? I guess I'm wanting to know, as far as on a box basis, what Gold did for the quarter?

I don't think we have any major change in our volume year over year, but we were talking about sales there, and not volume.

OK. Now, as far as the quarter goes, could you give us any commentary on what pricing did in local currencies?

Let me tell you, Heather, one thing, please. You are covering us without our will, and we would not like you to ask questions on this conference call, if you may.

Well, you know what? Per the SEC, you do ...

We don't want you to ask questions. You can make your own conclusions. You can cover us the way you want. But you have not been covering us in any objective way, and we thank you for being on this call. But we don't like to answer your questions.

Moving on, we'll go to Michelle Santos with Veredus Asset Management.

Hey, everybody.

Hi.

Fine, how are you guys doing?

Very well, thank you.

Good. Most of my questions have been answered already, but I do have one quick question. Has the SEC or any other state or federal regulatory organization requested any documents from the company or any interviews of management?

No, nothing at all.

Nothing at all?

Nothing at all.

Thank you. That's all the questions I have.

Thank you.

Up next we'll go to Allen Smith at Ryan Beckham & Co..

Hi. Great quarter. I was wondering, are you hedged on the end for '03, and at what levels would that be?

Yeah, our overall hedging is about 55% of our total exposure, and where it hedged throughout the year and both the year on year.

OK. And on the sale of the European distributor, I know the licenses go with those. What does it cost to reacquire those, and what would that do vis-a-vis earnings, and have you replaced those licenses yet?

We have. But I think you can wait until the 20th when we will have a detailed description of what we have instituted there. And we're still assessing all of those things at this moment.

OK. And on the acquisition in Dallas, what proportion of their sales are onions, tomatoes, and potatoes?

It's about 67% of their sales on these three items.

And what kind of margins do those carry vis-a-vis pineapple or banana margins?

Well, we can't give you the EBITDA, but we cannot give you breakdown of their margins. This is something we would not like.

We're just really unveiling the product line and actually studying what we can do to improve the margins. So at this time, it's really a work in progress for us.

OK. A little early?

Yeah.

Well, thank you very much. Again, great quarter.

Thank you.

Up next, we'll go to Ross Burner at Weintraub Capital.

Have you guys given earnings guidance in the past?

No.

You have never given earnings guidance?

No.

OK, because it looks like in some of your prior disclosures and -- review of your prior earnings you did give guidance, and now (inaudible) something has changed, so, just curious if that's a change in philosophy.

I think what we said on this call is what we have always said. We see this year, 2003, as a better performing year than 2002. And that's the kind of guidance we have given in the past.

OK. And then, in terms of your hedging position, can you talk about what prices you have hedged out at for the euro and the yen?

I think we have got very good hedging. And I think -- in line with where we should have and when we took those positions, but I think at this point we would rather not go into that detail.

Moving on, we'll go to PB Holdings' Pierre Brull.

To the word congratulations, I want to add the word thank you. My question has to do with the price of fuel, which has been going up. Despite the rising fuel, you have done magnificently. Were there any unusual factors by way of, I don't know, weather worldwide or something like that that benefited your very strong earnings in the last year and last quarter?

Like we said, our diversification, our Fresh Cut, our efficiencies, you know, these variables, be it fuel, be it paper (ph), be it weather, whatever, it applies to us and applies to everyone in this business. All our competitors are in the same line. So if it affects us in a beneficial way, it will affect our competitors as well. However, in our case, it shows very clearly that our business is probably managed better. So -- because all the valuables are for everybody the same.

Thank you.

Moving on, we will go to Highbridge Capital's Jason Lewes.

Hello, sir, your line is open.

Hello, Mr. Lewes from Highbridge Capital. If you are on a speakerphone, release your mute button, please.

Hi. This is Jason Lewis (ph) from Highbridge. Have you had any formal or informal inquires from the SEC related to the lawsuit or anything ...

We just answered that question by someone else, and we said there has never been any requests or any questions or any approaches.

I apologize for repeating it.

I'm sorry?

I apologize for repeating the question.

It's all right. I just wanted to repeat what we said earlier.

Thank you.

Pleasure.

Now to Tim Aerowish with Altitude Capital.

Hi. First of all, congratulations on another fine quarter. I have a couple of questions here. First of all, you talked about the I-2 rollout in the March quarter. Can you comment on what the impact on the SG&A line is? What -- you know, do you expect to see any benefits, what have the costs been so far, and have those been expensed? Do we expect to see any drag from that go away as that rolls out?

No, I don't think so. And I think you will see most of the benefits in the (inaudible) sales line because that's part of our distribution expense that we will be impacting, and that's where you'll see it. But I think the overall cost of the project is not truly material amount, as you see costs jump up due to amortization of the expenses or increased costs.

OK, great. And with respect to the Fresh Cut operations, can you give us a sense of, you know, what's the profitability like in that right now? What's the profitability in that segment right now compared to, you know, where you think it can be at the end of this year? And lastly, can you just give us also an idea of what you think the mix of your product will be? Bananas are still about 45% of sales. Where do you see that in, say, one year's time?

I can give you for the percentage of bananas sales would be -- I hope in one year's time would be around 40% or even lower. As far as the Fresh Cut operations, we would prefer not to give, you know, numbers on a conference call, but we can -- maybe later in the future we can give you some guidance. However, most of our Fresh Cut operations are actually in their early stages of production and business. You know, it's been only in the last probably couple of years that this Fresh Cut business has been initiated, and some of these Fresh Cut facilities are still not 100 percent utilized.

So the upside potential is very significant as we go down the road, as we gear up for more production and more product lines. I hope that this can, you know, satisfy your question.

Maybe if you could just clarify it. What I'm trying to get at here, are we likely to see that upside potential in 2003, or is it more a 2004 event?

Actually, maybe in 2003, but definitely as we go down four and five and the future, because we are expanding this business not only in the product lines, but also in the geographical sense of it, as we are moving into new areas, like North Carolina, we just - DC, with Fresh Cut operations, will be starting in about six weeks. This would roll out some Fresh Cut, as well as, in the West Coast, we have operations just starting right now. So we have so many things going on at the same time. And, you know, the results do not show up in immediate terms, but as we go down in the future, I think we will see this more significantly.

Great. Thank you.

Before moving on, once again, it's star one on your telephone keypad to ask a question.

We will now go to Banc of America's Bill Leach.

Good morning, everyone.

How are you doing, Bill?

I was just curious what you think of Fresh Express' entre (ph) into the prepackaged food business? Has that affected you competitively at all?

The Fresh Cut business is a very big market, to be honest with you. It's in its infancy. It's a virgin market. I think we have a different philosophy from Fresh Express in terms of packaging and in terms of presentation. You know, we have our own businesses, just like Del Monte Gold. We cannot stop anybody from growing pineapples. However, we have the major position, the dominant position. We maintain our business. And I think it applies the same in the Fresh Cut. We do grow our business year over year, and we have our customers, and I think, with acquisitions that we're doing as well now, it will give us even further leverage in terms of reaching new clients and new marketplaces.

But there's room for both of you to succeed, basically?

And don't forget as well that we have the Del Monte brand. Del Monte is completely different from any other brands here in the market.

Well, congratulations on a great year.

Thank you, Bill.

Let's go back to Allen Smith at Ryan Beckham & Co. for a follow up.

Just one quick one. On a store -- this was in Boca Raton, Florida, in a Winn-Dixie store -- this was last Saturday afternoon -- I noticed they had your bananas, and then 39 cents a pound, but they were carrying, rather than the Fresh Del Monte Gold pineapples, they were carrying a Dole pineapple at $4.95, which -- and I have seen your Gold pineapple in other stores here at $2.99. Are you going to be replacing Dole in Winn-Dixie? They are known to be a price leader, and I would think at $2.99 they would be more likely to stock yours than Dole at $4.95. I was shocked at the price difference.

It was good opportunity. You should have bought it. But I can assure you that we cannot interfere in the pricing of the supermarkets. They can buy it at 10 and can sell it for eight for other reasons, because they have other promotions or because they are (inaudible) or something. But we can assure you, like I said before, that our pricing on the Del Monte Gold is still as solid as it has been since day one, even better. You know, sometimes you read some coverage that they have been to the supermarket, and they have seen the prices, you know, in one supermarket. That's not a indication of the market.

Well, the $2.99 versus $4.95, I would think you would take Dole's market share completely away from them.

Well, I mean, we don't want to take anybody -- we have our market share, and our volume is being placed well in the market, and we don't need to compete. We are sold out anyway. So we don't need really to go and cut prices, and -- but anyway, this is -- I don't think that this is an indication of the pricing in the market. If you are seeing this, it must have been for ...

I see what you mean. So, since you're sold out, if Winn-Dixie wanted to change pineapples, you couldn't accommodate them anyway, I would guess?

I'm sorry?

I said, if you're sold out, I would assume if Winn-Dixie wanted to add your pineapples, since they already carry your banana line, I would assume you probably couldn't accommodate them anyway, regardless of price.

Maybe, maybe.

Thank you very much.

Pleasure.

Now we'll go to Hunter Global's Stewart Frow.

Hello, Mr. Friou? If you're ...

Yes.

Please go ahead, sir.

Can you just talk about -- I know that Dole and Chaquita are trying to get into this pineapple business. Have there been any major account losses, or have they been able to secure product placement in any of the big grocery stores?

I would like to state again, and (inaudible) again, that we are sold out. We don't have volumes enough to give to everybody in the market. So we really have not lost accounts. We are adding accounts. So I don't know how to answer your question except saying that we are sold out.

How are you adding accounts if you're sold out?

I mean, sold out in the sense that we are adding accounts because we are adding more volume every year. Because our volumes are increasing -- like we said, our volumes are increasing and our prices are still solid and even increasing.

Are you still the primary supplier to Winn-Dixie?

I'm sorry?

Are you still the primary supplier to Winn-Dixie?

I don't usually follow on capitals (ph) which one is primary or not primary. We follow where (ph) our business is better. We follow where our pricing is better.

Thank you.

Pleasure.

We'll go back to Ross Burner at Weintraub Capital.

Thanks. In the tax rate guidance for '03, did you talk about that? You had 15% for '02.

All we said was that we expected it to be in line with '02 -- similar tax expense line item.

OK. And then, can we assume that most of your debt you paid down was in kind of the end of the year because interest expense came down but didn't come down as much as you would expect, given the debt levels?

Yes. What we had on our debt level was down $87 million with $25 million on the revolver. So, pretty much at that point we were, except for some non-revolving dealt, pretty much debt free, except now we have had the acquisition that added 100 million to our debt level.

OK. And do you -- all right. Do you have any understanding of -- in terms of Dole's production level increases on the pineapple side? You know, it seems like they want to -- this is their big targeted business and they're going to, you know, more than quadruple production volumes and -- do you have any sense on exactly how big they want to be in pineapple?

No. We care less how much big they want to be. It doesn't make any difference to us. We care about our product and our market share. We are in the market. We have the customers that buy our pineapples. And we have -- we attend (ph) our pricing. That's what we care for, really. This is a big market. It's expanding. The consumption of pineapple is increasing. And we're maintaining our share and our pricing, and that's what we really care for.

So you actually think that this is not a commodity business. You think it's a branded product that you can demand premium pricing on?

I believe so, yes.

OK. Thank you.

Pleasure.

This concludes the time allocated for today's call. If you have additional questions, please contact the company at the number given during the opening remarks. At this time, I would like to turn the call back to Mr. Abu-Ghazaleh for closing remarks.

Thank you very much, Brett. I think that those of you who have been following us for some time will agree that we have worked hard to grow our business, and we will continue to do so for our investors in the future.

Thank you for joining us on today's call.

That concludes our program. Once again, everyone, thank you for dialing in, and have a pleasant day.