UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 27, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 333-07708 FRESH DEL MONTE PRODUCE INC. (Exact Name of Registrant as Specified in Its Charter) Cayman Islands N/A (State or Other Jurisd ...

PART I: FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Q3 and the nine months ended September 27, 2019, show improved net income and asset growth, despite a decrease in operating cash flow [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in millions) | Account | Sep 27, 2019 | Dec 28, 2018 | | :--- | :--- | :--- | | **Total current assets** | $1,048.8 | $1,138.8 | | Operating lease right-of-use assets | $168.2 | — | | **Total assets** | **$3,345.1** | **$3,255.2** | | **Total current liabilities** | $538.8 | $586.0 | | Long-term debt and finance leases | $589.3 | $661.9 | | **Total liabilities** | **$1,525.1** | **$1,485.6** | | **Total shareholders' equity** | **$1,764.8** | **$1,717.8** | - The balance sheet as of September 27, 2019 reflects the adoption of the new lease accounting standard (Topic 842), resulting in the recognition of **$168.2 million** in Operating lease right-of-use assets and corresponding lease liabilities[11](index=11&type=chunk)[40](index=40&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Quarterly Performance (in millions, except per share data) | Metric | Q3 2019 | Q3 2018 | | :--- | :--- | :--- | | Net sales | $1,070.2 | $1,069.5 | | Gross profit | $74.7 | $52.6 | | Operating income (loss) | $27.1 | $(11.3) | | Net income (loss) attributable to Fresh Del Monte | $18.1 | $(21.5) | | Diluted EPS | $0.38 | $(0.44) | Nine-Month Performance (in millions, except per share data) | Metric | Nine Months 2019 | Nine Months 2018 | | :--- | :--- | :--- | | Net sales | $3,463.8 | $3,448.0 | | Gross profit | $264.3 | $237.4 | | Operating income | $125.6 | $59.0 | | Net income attributable to Fresh Del Monte | $92.3 | $12.1 | | Diluted EPS | $1.90 | $0.25 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Nine Months Ended (in millions) | Activity | Sep 27, 2019 | Sep 28, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $130.1 | $270.6 | | Net cash used in investing activities | $(44.8) | $(486.0) | | Net cash (used in) provided by financing activities | $(96.3) | $215.4 | | **Net decrease in cash and cash equivalents** | **$(5.0)** | **$(2.6)** | - Investing activities in 2018 were significantly higher due to the **$371.8 million** purchase of a business (Mann Packing), whereas 2019 investing activities were primarily driven by capital expenditures of **$93.5 million**, partially offset by **$48.0 million** in proceeds from asset sales[19](index=19&type=chunk) - Financing activities in 2019 showed a net use of cash, driven by net debt payments of **$72.5 million** and share repurchases of **$17.9 million**. This contrasts with 2018, which saw net debt proceeds of **$269.6 million**, largely to fund the Mann Packing acquisition[19](index=19&type=chunk)[236](index=236&type=chunk)[238](index=238&type=chunk) [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, including the adoption of Topic 842, ongoing income tax disputes, segment reporting changes, and the subsequent refinancing of the company's credit facility - The company adopted the new lease accounting standard, Topic 842, on the first day of its 2019 fiscal year, resulting in a **$3.0 million** adjustment to retained earnings due to deferred taxes[40](index=40&type=chunk) - The company is contesting income tax deficiencies from two foreign jurisdictions related to transfer pricing, aggregating approximately **$153.8 million** for tax years 2012-2016. No additional amounts have been accrued as management believes the proposed adjustments are without technical merit[64](index=64&type=chunk) - In March 2019, the company changed its reportable segments to two primary businesses: '**fresh and value-added products**' and '**bananas**', along with an 'other products and services' segment[129](index=129&type=chunk) - Subsequent to the quarter end, on October 1, 2019, the company entered into a new five-year, **$1.1 billion** syndicated senior unsecured revolving credit facility, replacing the prior facility that was set to expire in April 2020[105](index=105&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes improved Q3 and nine-month performance to value-added products, with gross profit increases across segments, while liquidity remains solid following a credit facility refinancing [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Q3 2019 net sales remained flat at **$1.07 billion**, but gross profit significantly increased to **$74.7 million**, driven by improved performance across all segments, a trend continuing for the nine-month period Q3 2019 vs Q3 2018 Performance (in millions) | Metric | Q3 2019 | Q3 2018 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,070.2 | $1,069.5 | +$0.7 | | Gross Profit | $74.7 | $52.6 | +$22.1 | | Operating Income (Loss) | $27.1 | $(11.3) | +$38.4 | - The increase in Q3 gross profit was driven by higher margins in **fresh-cut fruit**, **pineapples**, and **vegetables**, along with improved performance in the **banana** and **Jordanian poultry** businesses[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) Nine Months 2019 vs 2018 Performance (in millions) | Metric | Nine Months 2019 | Nine Months 2018 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $3,463.8 | $3,448.0 | +$15.8 | | Gross Profit | $264.3 | $237.4 | +$26.9 | | Operating Income | $125.6 | $59.0 | +$66.6 | - The nine-month gross profit improvement was primarily due to the **fresh and value-added products** segment, which saw a **$28.6 million** increase, driven by **non-tropical fruit**, **melons**, and **fresh-cut fruit**[215](index=215&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash from operations decreased for the first nine months of 2019, while investing and financing activities saw significant shifts, and the company successfully refinanced its **$1.1 billion** credit facility - Net cash provided by operating activities decreased to **$130.1 million** in the first nine months of 2019 from **$270.6 million** in the prior year, primarily due to lower balances of accounts payable and accrued expenses[231](index=231&type=chunk) - The company entered into a new five-year, **$1.1 billion** credit facility on October 1, 2019, replacing the previous facility and extending the maturity to October 1, 2024[240](index=240&type=chunk) - Significant capital commitments exist for the construction of six new refrigerated container ships, with expected payments of approximately **$12.2 million** in 2019, **$85.2 million** in 2020, and **$41.4 million** in 2021[251](index=251&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in market risk exposures compared to its prior fiscal year's Annual Report on Form 10-K - There were no material changes in market risk compared to the disclosures in the **2018 Form 10-K**[265](index=265&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of September 27, 2019, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that as of September 27, 2019, the company's disclosure controls and procedures were **effective**[267](index=267&type=chunk) - No changes to internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal controls were identified during the quarter[267](index=267&type=chunk) PART II: OTHER INFORMATION [Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 of the Consolidated Financial Statements for details on legal proceedings, including an ongoing environmental liability and a recently settled business litigation - For details on legal proceedings, the report refers to **Note 11**, which covers commitments and contingencies[270](index=270&type=chunk) [Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) The company updated its risk factors to highlight the threat of Tropical Race 4 (TR4), a banana crop disease discovered in Colombia, which poses a significant risk to Latin American operations - A key risk factor update relates to **Tropical Race 4 (TR4)**, a serious banana crop disease, which was discovered in Colombia in the third quarter of 2019[274](index=274&type=chunk) - The spread of TR4 to the company's farms or suppliers in Latin America could destroy banana crops, adversely affect fruit costs, and harm profitability[274](index=274&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2019, the company repurchased 357,493 ordinary shares as part of its $300 million stock repurchase program, with $262.5 million remaining available Share Repurchases for Q3 2019 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jul 1 - Jul 31, 2019 | 356,549 | $24.33 | | Aug 1 - Aug 31, 2019 | 944 | $25.00 | | Sep 1 - Sep 30, 2019 | — | — | | **Total** | **357,493** | **$24.33** | - As of the end of the quarter, **$262.5 million** remained available under the company's **$300 million** share repurchase program authorized in February 2018[276](index=276&type=chunk) [Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications and the new **$1.1 billion** credit agreement - Key exhibits filed include **CEO/CFO certifications** and the new **Second Amended and Restated Credit Agreement** from October 1, 2019[279](index=279&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ——————————— FORM 10-Q ——————————— (Mark One) ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 28, 2019 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ——————————— Title of each class Trading Symbol Name of each exchange on which registered Ordinary Shares, $0.01 Par Value Per Share FD ...

Fresh Del Monte Produce, Inc. (NYSE:FDP) Q2 2019 Earnings Conference Call July 30, 2019 11:00 AM ET Company Participants Christine Cannella - VP Global Corporate Communications and IR Mohammad Abu-Ghazaleh - Chairman and CEO Eduardo Bezerra - SVP and CFO Conference Call Participants Jonathan Feeney - Consumer Edge Mitch Pinheiro - Sturdivant Operator Good day everyone and welcome to Fresh Del Monte Produce’s Second Quarter 2019 Conference Call. Today’s conference call is being broadcast live over the Intern ...

Fresh Del Monte Produce Inc. (NYSE:FDP) Q1 2019 Earnings Conference Call April 30, 2019 11:00 AM ET Company Participants Christine Cannella - VP Global Corporate Communications and IR Mohammad Abu-Ghazaleh - Chairman and CEO Eduardo Bezerra - SVP and CFO Conference Call Participants Jonathan Feeney - Consumer Edge Operator Good day, everyone, and welcome to Fresh Del Monte Produce's First Quarter 2019 Conference Call. Today's conference call is being broadcast live over the Internet, and also being recorded ...

[PART I: FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%3A%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the quarter ended March 29, 2019 [Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) Highlights key asset, liability, and equity balances as of March 29, 2019, compared to year-end 2018 Consolidated Balance Sheet Highlights (March 29, 2019 vs. December 28, 2018) | Metric (U.S. dollars in millions) | March 29, 2019 | December 28, 2018 | | :-------------------------------- | :------------- | :---------------- | | Total current assets | $1,189.3 | $1,138.8 | | Total assets | $3,511.4 | $3,255.2 | | Total current liabilities | $620.7 | $586.0 | | Total liabilities | $1,708.7 | $1,485.6 | | Total shareholders' equity | $1,749.9 | $1,717.8 | [Consolidated Statements of Operations (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)) Details the company's revenues, costs, and profitability for the first quarter of 2019 versus 2018 Consolidated Statements of Operations Highlights (Quarter Ended March 29, 2019 vs. March 30, 2018) | Metric (U.S. dollars in millions) | Quarter Ended March 29, 2019 | Quarter Ended March 30, 2018 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net sales | $1,154.2 | $1,106.1 | | Gross profit | $93.3 | $106.5 | | Operating income | $41.3 | $56.5 | | Net income | $37.2 | $43.2 | | Net income attributable to Fresh Del Monte Produce Inc. | $36.1 | $41.5 | | Basic EPS | $0.74 | $0.85 | | Diluted EPS | $0.74 | $0.85 | - Dividends declared per ordinary share **decreased from $0.150 in Q1 2018 to $0 in Q1 2019**[16](index=16&type=chunk) [Consolidated Statements of Comprehensive Income (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Summarizes net income and other comprehensive income components, including unrealized gains and losses Consolidated Statements of Comprehensive Income Highlights (Quarter Ended March 29, 2019 vs. March 30, 2018) | Metric (U.S. dollars in millions) | Quarter Ended March 29, 2019 | Quarter Ended March 30, 2018 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net income | $37.2 | $43.2 | | Net unrealized (loss) on derivatives, net of tax | $(4.1) | $(1.8) | | Net unrealized foreign currency translation (loss) gain | $(0.8) | $4.3 | | Comprehensive income | $32.2 | $45.8 | | Comprehensive income attributable to Fresh Del Monte Produce Inc. | $31.1 | $44.1 | [Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Outlines cash movements from operating, investing, and financing activities for the first quarter Consolidated Statements of Cash Flows Highlights (Quarter Ended March 29, 2019 vs. March 30, 2018) | Metric (U.S. dollars in millions) | Quarter Ended March 29, 2019 | Quarter Ended March 30, 2018 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash (used in) provided by operating activities | $(7.2) | $1.5 | | Net cash used in investing activities | $(29.6) | $(413.9) | | Net cash provided by financing activities | $35.2 | $423.1 | | Net increase in cash and cash equivalents | $0.6 | $12.3 | | Cash and cash equivalents, ending | $21.9 | $37.4 | - **Operating cash flow decreased significantly**, moving from a positive $1.5 million in Q1 2018 to a negative $7.2 million in Q1 2019[20](index=20&type=chunk) - Investing activities saw a **much lower cash outflow in Q1 2019** ($29.6 million) compared to Q1 2018 ($413.9 million), primarily due to the Mann Packing acquisition in the prior year[20](index=20&type=chunk) [Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interest](index=11&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%20and%20Redeemable%20Noncontrolling%20Interest) Details the changes in shareholders' equity and redeemable noncontrolling interest during the quarter Shareholders' Equity Highlights (March 29, 2019 vs. December 28, 2018) | Metric (U.S. dollars in millions) | March 29, 2019 | December 28, 2018 | | :-------------------------------- | :------------- | :---------------- | | Total Fresh Del Monte Produce Inc. shareholders' equity | $1,724.5 | $1,692.0 | | Total shareholders' equity | $1,749.9 | $1,717.8 | | Redeemable noncontrolling interest | $52.8 | $51.8 | - **Accumulated Other Comprehensive Loss increased** from $(41.6) million at December 28, 2018, to $(46.6) million at March 29, 2019[13](index=13&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) Provides detailed explanations of accounting policies and specific financial statement items [1. General](index=12&type=section&id=1.%20General) This note provides an overview of the company's business, product sourcing, and distribution regions - The Company is primarily engaged in the worldwide production, transportation, and marketing of fresh produce and prepared food products, sourcing from Central/South/North America, Africa, and the Philippines, and distributing globally[27](index=27&type=chunk) - Fresh Del Monte holds exclusive, royalty-free, perpetual licenses to use the DEL MONTE® brand for fresh fruit, vegetables, and certain prepared foods in specific geographic regions[27](index=27&type=chunk) - The unaudited Consolidated Financial Statements for Q1 2019 are prepared in accordance with GAAP for interim financial information and are subject to significant seasonal variations[28](index=28&type=chunk) [2. Recently Issued Accounting Pronouncements](index=13&type=section&id=2.%20Recently%20Issued%20Accounting%20Pronouncements) This note outlines recently adopted and not-yet-adopted accounting pronouncements and their impacts - Adopted ASU 2016-02 (Topic 842) on Leases, effective December 29, 2018, using a modified retrospective method, resulting in a **$3.0 million retained earnings adjustment** due to deferred taxes[35](index=35&type=chunk)[36](index=36&type=chunk) - Elected practical expedients for lease accounting, including not reassessing prior conclusions on lease classification and initial direct costs, and applying a short-term lease recognition exemption[37](index=37&type=chunk) - Several ASUs (2018-18, 2018-17, 2018-15, 2018-14, 2018-13, 2016-13) are not yet adopted, with effective dates in fiscal years 2020 and 2021, and their potential impact is currently under evaluation[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[46](index=46&type=chunk) [3. Asset Impairment and Other Charges, Net](index=15&type=section&id=3.%20Asset%20Impairment%20and%20Other%20Charges%2C%20Net) The company recorded $3.0 million in asset impairment and other charges for Q1 2019 Asset Impairment and Other Charges, Net (Q1 2019 vs. Q1 2018) | Category (U.S. dollars in millions) | Quarter Ended March 29, 2019 | Quarter Ended March 30, 2018 | | :---------------------------------- | :--------------------------- | :--------------------------- | | Banana segment: Philippine exit activities | $0.2 | $0 | | Fresh and value-added products: Acquisition costs (Mann Packing) | $0 | $2.5 | | Fresh and value-added products: Sanger insurance recoveries | $0 | $(0.9) | | Fresh and value-added products: Impairment of equity investment | $2.8 | $0 | | Total asset impairment and other charges, net | $3.0 | $1.6 | - The Q1 2019 charges include a **$2.8 million impairment of an equity investment** and $0.2 million for contract terminations in Philippine banana operations[48](index=48&type=chunk) [4. Acquisition](index=16&type=section&id=4.%20Acquisition) This note details the acquisition of Mann Packing in February 2018 for $357.2 million - Acquired 100% of Mann Packing on February 26, 2018, for **$357.2 million**, funded by a promissory note and cash[51](index=51&type=chunk)[52](index=52&type=chunk) - The acquisition resulted in **$162.0 million allocated to goodwill** and $139.8 million to definite-lived intangible assets (customer lists, trade names, trademarks)[53](index=53&type=chunk) Mann Packing Financial Contribution (Partial Q1 2018) | Metric (U.S. dollars in millions) | Period Feb 27 - Mar 30, 2018 | | :-------------------------------- | :--------------------------- | | Net sales | $51.3 | | Net income attributable to Fresh Del Monte Produce, Inc. | $0.9 | Pro Forma Combined Financial Information (Q1 2019 vs. Q1 2018) | Metric (U.S. dollars in millions) | Quarter Ended March 29, 2019 | Quarter Ended March 30, 2018 (Pro Forma) | | :-------------------------------- | :--------------------------- | :--------------------------------------- | | Net sales | $1,154.2 | $1,185.3 | | Net income attributable to Fresh Del Monte Produce, Inc. | $36.1 | $43.5 | [5. Income Taxes](index=17&type=section&id=5.%20Income%20Taxes) The company is contesting income tax deficiencies totaling approximately $142.9 million from two foreign jurisdictions - Taxing authorities in two foreign jurisdictions issued income tax deficiencies of approximately **$142.9 million** (including interest and penalties) for tax years 2012-2016, related to transfer pricing[58](index=58&type=chunk) - The Company **strongly disagrees** with the proposed adjustments, has filed protests, and has not accrued additional amounts, intending to vigorously contest the matters[58](index=58&type=chunk) [6. Financing Receivables](index=18&type=section&id=6.%20Financing%20Receivables) Financing receivables, primarily advances to growers, totaled $41.7 million net as of March 29, 2019 - Financing receivables primarily consist of advances to independent growers and suppliers, collateralized by property liens and pledges of produce[61](index=61&type=chunk)[62](index=62&type=chunk) Gross Advances to Growers and Suppliers (March 29, 2019 vs. December 28, 2018) | Category (U.S. dollars in millions) | March 29, 2019 | December 28, 2018 | | :---------------------------------- | :------------- | :---------------- | | Short-term advances | $43.6 | $51.9 | | Long-term advances | $4.7 | $3.7 | | Allowance for advances | $(2.8) | $(2.8) | | Net advances | $41.7 | $49.8 | [7. Share-Based Compensation](index=19&type=section&id=7.%20Share-Based%20Compensation) Share-based compensation expense totaled $4.2 million for Q1 2019, down from $4.7 million in Q1 2018 Share-Based Compensation Expense (Q1 2019 vs. Q1 2018) | Category (U.S. dollars in millions) | Quarter Ended March 29, 2019 | Quarter Ended March 30, 2018 | | :---------------------------------- | :--------------------------- | :--------------------------- | | Stock options | $0 | $0.1 | | RSUs/PSUs | $3.3 | $3.6 | | RSAs | $0.9 | $1.0 | | Total | $4.2 | $4.7 | - Proceeds from stock option exercises **decreased from $0.7 million in Q1 2018 to $0.2 million in Q1 2019**[68](index=68&type=chunk) - **2018 Performance Stock Units (PSUs) were forfeited** due to not meeting the performance metric[76](index=76&type=chunk) [8. Inventories](index=20&type=section&id=8.%20Inventories) Total inventories increased to $575.8 million as of March 29, 2019, from $565.3 million at year-end 2018 Inventories (March 29, 2019 vs. December 28, 2018) | Category (U.S. dollars in millions) | March 29, 2019 | December 28, 2018 | | :---------------------------------- | :------------- | :---------------- | | Finished goods | $238.8 | $217.4 | | Raw materials and packaging supplies | $171.1 | $167.0 | | Growing crops | $165.9 | $180.9 | | Total inventories | $575.8 | $565.3 | [9. Leases](index=21&type=section&id=9.%20Leases) The company recognized significant lease-related assets and liabilities following the adoption of ASU 2016-02 - Adopted ASU No. 2016-02, 'Leases (Topic 842),' on December 29, 2018, requiring balance sheet recognition for leases over 12 months[80](index=80&type=chunk) Lease-Related Assets and Liabilities (March 29, 2019) | Category (U.S. dollars in millions) | Amount | | :---------------------------------- | :----- | | Operating lease right-of-use assets | $192.2 | | Finance lease assets | $1.3 | | Total lease assets | $193.5 | | Current operating lease liabilities | $56.0 | | Noncurrent operating lease liabilities | $109.5 | | Total lease liabilities | $166.4 | Lease Costs (Quarter Ended March 29, 2019) | Category (U.S. dollars in millions) | Amount | | :---------------------------------- | :----- | | Finance lease cost (amortization) | $0.1 | | Operating lease cost | $23.3 | | Short-term lease cost | $2.4 | | Variable lease cost | $1.3 | | Total lease cost | $27.1 | [10. Long-Term Debt and Finance Lease Obligations](index=23&type=section&id=10.%20Long-Term%20Debt%20and%20Finance%20Lease%20Obligations) Total long-term debt and finance lease obligations increased to $700.6 million as of March 29, 2019 Long-Term Debt and Finance Lease Obligations (March 29, 2019 vs. December 28, 2018) | Category (U.S. dollars in millions) | March 29, 2019 | December 28, 2018 | | :---------------------------------- | :------------- | :---------------- | | Senior unsecured revolving credit facility | $699.7 | $661.3 | | Finance lease obligations | $0.9 | $1.1 | | Total long-term debt and finance lease obligations | $700.6 | $662.4 | | Less: Current maturities | $(0.4) | $(0.5) | | Long-term debt and finance lease obligations | $700.2 | $661.9 | - The Credit Facility's borrowing limit was increased from $800 million to **$1.1 billion** in February 2018, with **$699.7 million outstanding** at March 29, 2019, at an interest rate of 4.03%[95](index=95&type=chunk)[96](index=96&type=chunk)[183](index=183&type=chunk) - The Company plans to refinance its Credit Facility, which matures on April 15, 2020, during 2019 and was in compliance with all covenants as of March 29, 2019[180](index=180&type=chunk)[184](index=184&type=chunk) [11. Commitments and Contingencies](index=25&type=section&id=11.%20Commitments%20and%20Contingencies) The company has an ongoing environmental cleanup liability and recently settled a business litigation - Accrued **$13.5 million** for the Kunia Well Site environmental cleanup as of March 29, 2019, with expected expenditures of $0.3 million in 2019, $1.1 million in 2020, $1.0 million in 2021, and $0.9 million in 2022 and 2023[106](index=106&type=chunk) - Settled a business transaction litigation on March 14, 2019, resulting in a **net gain of approximately $16.7 million**, included in other income, net[107](index=107&type=chunk) [12. Earnings Per Share](index=26&type=section&id=12.%20Earnings%20Per%20Share) Basic and diluted net income per ordinary share for Q1 2019 was $0.74, a decrease from $0.85 in Q1 2018 Earnings Per Share (Q1 2019 vs. Q1 2018) | Metric (U.S. dollars in millions, except per share data) | Quarter Ended March 29, 2019 | Quarter Ended March 30, 2018 | | :------------------------------------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to Fresh Del Monte Produce Inc. | $36.1 | $41.5 | | Weighted average ordinary shares - Basic | 48,547,698 | 48,781,596 | | Weighted average ordinary shares - Diluted | 48,752,162 | 49,032,952 | | Basic EPS | $0.74 | $0.85 | | Diluted EPS | $0.74 | $0.85 | - Certain unvested RSUs and PSUs were excluded from diluted EPS calculation as their effect would have been antidilutive[111](index=111&type=chunk) [13. Retirement and Other Employee Benefits](index=27&type=section&id=13.%20Retirement%20and%20Other%20Employee%20Benefits) Net periodic benefit costs for pension and post-retirement plans remained stable at $2.4 million Net Periodic Benefit Costs (Q1 2019 vs. Q1 2018) | Metric (U.S. dollars in millions) | Quarter Ended March 29, 2019 | Quarter Ended March 30, 2018 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Service cost | $1.4 | $1.5 | | Interest cost | $1.7 | $1.6 | | Expected return on assets | $(0.8) | $(0.9) | | Amortization of net actuarial loss | $0.1 | $0.2 | | Net periodic benefit costs | $2.4 | $2.4 | - Net periodic benefit costs for other non-U.S.-based plans were $0.8 million for Q1 2019, up from $0.7 million in Q1 2018[115](index=115&type=chunk) [14. Business Segment Data](index=28&type=section&id=14.%20Business%20Segment%20Data) The company realigned its reportable segments into 'fresh and value-added products' and 'bananas' - Reportable segments were changed in March 2019 to 'fresh and value-added products' and 'bananas,' with 'other products and services' as ancillary, reflecting management's review of operating results[118](index=118&type=chunk)[167](index=167&type=chunk) Net Sales and Gross Profit by Segment (Q1 2019 vs. Q1 2018) | Segment (U.S. dollars in millions) | Q1 2019 Net Sales | Q1 2019 Gross Profit | Q1 2018 Net Sales | Q1 2018 Gross Profit | | :--------------------------------- | :---------------- | :------------------- | :---------------- | :------------------- | | Fresh and value-added products | $690.0 (60%) | $61.5 (66%) | $616.5 (56%) | $51.3 (48%) | | Banana | $431.5 (37%) | $32.9 (35%) | $453.2 (41%) | $52.1 (49%) | | Other products and services | $32.7 (3%) | $(1.1) (-1%) | $36.4 (3%) | $3.1 (3%) | | Totals | $1,154.2 (100%) | $93.3 (100%) | $1,106.1 (100%) | $106.5 (100%) | Net Sales by Geographic Region (Q1 2019 vs. Q1 2018) | Region (U.S. dollars in millions) | Q1 2019 Net Sales | Q1 2018 Net Sales | | :-------------------------------- | :---------------- | :---------------- | | North America | $748.8 (65%) | $663.4 (60%) | | Europe | $171.3 (15%) | $194.1 (18%) | | Asia | $120.7 (10%) | $112.7 (10%) | | Middle East | $97.8 (9%) | $115.9 (10%) | | Other | $15.6 (1%) | $20.0 (2%) | | Totals | $1,154.2 (100%) | $1,106.1 (100%) | [15. Derivative Financial Instruments](index=29&type=section&id=15.%20Derivative%20Financial%20Instruments) The company uses derivatives to hedge exposure to foreign exchange and interest rate fluctuations - Derivative financial instruments are used to reduce exposure to foreign exchange rate and variable interest rate fluctuations, predominantly designated as cash flow hedges[125](index=125&type=chunk) Outstanding Foreign Currency Forward Contracts (March 29, 2019) | Currency | Notional Amount (in millions) | | :------------ | :---------------------------- | | Euro (EUR) | 93.6 | | British pound (GBP) | 5.9 | | Japanese yen (JPY) | 3,119.7 | | Korean won (KRW) | 28,291.2 | - Notional value of interest rate contracts outstanding was **$400.0 million** as of March 29, 2019, maturing in 2024 and 2028[135](index=135&type=chunk) Effect of Derivative Instruments on Consolidated Statements of Operations (Q1 2019 vs. Q1 2018) | Derivative Type | Location of (Loss) Income Reclassified from AOCI | Q1 2019 (Loss) Income (millions) | Q1 2018 (Loss) Income (millions) | | :------------------------ | :----------------------------------------------- | :------------------------------- | :------------------------------- | | Foreign exchange contracts | Net sales | $3.3 | $(1.8) | | Foreign exchange contracts | Cost of products sold | $0.6 | $0 | | Interest rate swaps | Interest expense | $(9.2) | $0 | | Total | | $(5.3) | $(1.8) | [16. Fair Value Measurements](index=32&type=section&id=16.%20Fair%20Value%20Measurements) This note details the fair value measurement of financial instruments and non-financial assets - Derivative instruments are valued using an income approach (discounted cash flow model) and classified as **Level 2** due to observable inputs[141](index=141&type=chunk) Fair Value Measurements (March 29, 2019) | Category (U.S. dollars in millions) | Level 1 | Level 2 | Level 3 | | :---------------------------------- | :------ | :------ | :------ | | Foreign currency forward contracts, net asset (liability) | $0 | $4.7 | $0 | | Interest rate contracts, net asset (liability) | $0 | $(16.7) | $0 | - The Mann Packing acquisition's goodwill ($162.0 million) and redeemable noncontrolling interest were valued using **Level 3 inputs**, based on income and market approaches[149](index=149&type=chunk)[150](index=150&type=chunk) - An equity investment in Purple Carrot incurred a **$2.8 million impairment charge** in Q1 2019, with its fair value of $1.4 million classified as Level 3[154](index=154&type=chunk) [17. Accumulated Other Comprehensive Income (Loss)](index=35&type=section&id=17.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Accumulated other comprehensive loss increased to $(46.6) million at March 29, 2019 Changes in Accumulated Other Comprehensive Income (Loss) (Q1 2019) | Component (U.S. dollars in millions) | Balance at Dec 28, 2018 | Other comprehensive (loss) before reclassifications | Amounts reclassified from AOCI | Net current period other comprehensive (loss) | Balance at Mar 29, 2019 | | :----------------------------------- | :---------------------- | :-------------------------------------------------- | :----------------------------- | :-------------------------------------------- | :---------------------- | | Changes in fair Value of Effective cash Flow hedges | $(5.8) | $(3.6) | $(0.5) | $(4.1) | $(9.9) | | Foreign Currency Translation Adjustment | $(14.9) | $(0.8) | $0 | $(0.8) | $(15.7) | | Retirement Benefit Adjustment | $(20.9) | $(0.2) | $0.1 | $(0.1) | $(21.0) | | Total | $(41.6) | $(4.6) | $(0.4) | $(5.0) | $(46.6) | - A net current period other comprehensive loss of **$(5.0) million** was recognized in Q1 2019, primarily from derivative losses and foreign currency translation[156](index=156&type=chunk) [18. Shareholders' Equity](index=36&type=section&id=18.%20Shareholders'%20Equity) No ordinary shares were repurchased and no dividends were paid in Q1 2019 - As of March 29, 2019, **48,651,755 ordinary shares** were issued and outstanding[159](index=159&type=chunk) - No ordinary shares were repurchased in Q1 2019; **$280.4 million remains available** under the $300 million stock repurchase program approved in February 2018[162](index=162&type=chunk)[163](index=163&type=chunk) - **No dividends were paid in Q1 2019**, compared to $0.150 per ordinary share ($7.3 million total) in Q1 2018, due to credit facility covenant restrictions[164](index=164&type=chunk)[179](index=179&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on financial performance, liquidity, and operational results for Q1 2019 [Overview](index=38&type=section&id=Overview) Outlines the company's vertically integrated business model and recent strategic segment realignment - Fresh Del Monte is a vertically integrated producer, marketer, and distributor of fresh and fresh-cut fruit and vegetables, and prepared foods, primarily under the DEL MONTE® brand[166](index=166&type=chunk) - Business segments were realigned in March 2019 to 'banana' and 'fresh and value-added products' (including Mann Packing), with 'other products and services' as ancillary, to reflect strategic focus and management structure[167](index=167&type=chunk)[168](index=168&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Analyzes changes in cash flow, working capital, and capital resources during the first quarter - Net cash used in operating activities was **$7.2 million in Q1 2019**, a decrease of $8.7 million from Q1 2018, primarily due to lower net income, lower accounts payable, and higher finished goods inventory[169](index=169&type=chunk) - **Working capital increased by $15.8 million** to $568.6 million at March 29, 2019, driven by higher trade accounts receivable and finished goods inventory[170](index=170&type=chunk) - Net cash used in investing activities **significantly decreased to $29.6 million** in Q1 2019 from $413.9 million in Q1 2018, as the prior year included the $371.7 million Mann Packing acquisition[171](index=171&type=chunk)[172](index=172&type=chunk) - Net cash provided by financing activities **decreased to $35.2 million** in Q1 2019 from $423.1 million in Q1 2018, mainly due to lower net borrowings on long-term debt and no dividends paid in Q1 2019[176](index=176&type=chunk)[177](index=177&type=chunk) - The Company plans to **refinance its $1.1 billion Credit Facility**, which matures in April 2020, during 2019[178](index=178&type=chunk)[180](index=180&type=chunk) - The Company expects to make payments of approximately $12.4 million in 2019, $105.8 million in 2020, and $20.7 million in 2021 for the building of six new refrigerated container ships[188](index=188&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Details the operational performance, including analysis of net sales, gross profit, and expenses by segment - **Net sales increased by $48.1 million** to $1,154.2 million in Q1 2019, primarily driven by the Mann Packing acquisition's contribution of $138.9 million in the fresh and value-added products segment[195](index=195&type=chunk) - Fresh and value-added products segment net sales increased $73.5 million, driven by fresh-cut vegetables, vegetables, avocados, and prepared food, partially offset by lower pineapple, melon, and non-tropical fruit sales[196](index=196&type=chunk)[198](index=198&type=chunk) - Banana segment net sales decreased by $21.7 million due to lower sales in Europe and the Middle East, despite a 1% increase in worldwide sales volume[203](index=203&type=chunk) - **Gross profit decreased by $13.2 million** to $93.3 million in Q1 2019, primarily due to lower gross profit in the banana and other products and services segments, partially offset by an increase in fresh and value-added products[201](index=201&type=chunk) - Banana segment gross profit decreased $19.2 million due to lower per unit selling prices in Europe, Middle East, and Asia, despite lower fruit costs[205](index=205&type=chunk) - **Operating income decreased by $15.2 million** to $41.3 million in Q1 2019, impacted by lower gross profit, higher SG&A expenses (due to Mann Packing), and increased asset impairment charges[212](index=212&type=chunk) - Interest expense increased to $6.9 million in Q1 2019 from $3.7 million in Q1 2018, due to higher average loan balances and interest rates[213](index=213&type=chunk) - Other income (expense), net, shifted from an expense of $(3.4) million in Q1 2018 to an income of $11.3 million in Q1 2019, primarily due to a **$16.7 million gain from a business transaction litigation settlement**[214](index=214&type=chunk) [Fair Value Measurements](index=44&type=section&id=Fair%20Value%20Measurements) Discusses the fair value measurement of assets and liabilities, including Level 3 inputs - A **$2.8 million charge for asset impairment** related to an equity investment in Purple Carrot was recorded in Q1 2019, with its fair value of $1.4 million classified as Level 3[217](index=217&type=chunk) - The purchase price allocation for the Mann Packing acquisition, including **$162.0 million goodwill**, is subject to revision, with fair values estimated using Level 3 inputs for most assets and Level 2/1 for working capital and cash[220](index=220&type=chunk) - The fair value of the redeemable noncontrolling interest from the Mann Packing acquisition is estimated using **Level 3 inputs** based on income and market approaches[221](index=221&type=chunk) [Seasonality](index=44&type=section&id=Seasonality) Notes that interim results are subject to significant seasonal variations - Interim results are subject to significant seasonal variations and may not be indicative of full fiscal year results[222](index=222&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States there have been no material changes in market risk from the prior annual report - No material changes in market risk have occurred since the disclosures in the Annual Report on Form 10-K for the year ended December 28, 2018[223](index=223&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 29, 2019 - Disclosure controls and procedures were deemed **effective** as of March 29, 2019[225](index=225&type=chunk) - Material changes to internal control over financial reporting occurred due to:[227](index=227&type=chunk) - Ongoing integration of Mann Packing's acquired operations[226](index=226&type=chunk) - Implementation of a new lease accounting system and process in response to ASU No. 2016-02, 'Leases (Topic 842)'[228](index=228&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) Cross-references legal proceeding details to the Commitments and Contingencies note in the financial statements - Legal proceedings information is cross-referenced to Note 11, 'Commitments and Contingencies,' in the Consolidated Financial Statements[231](index=231&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) States there have been no material changes to the company's risk factors from the prior annual report - No material changes to risk factors have occurred since the Annual Report on Form 10-K for the year ended December 28, 2018, except as updated in this report[232](index=232&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any ordinary shares during the first quarter of 2019 - **No ordinary shares were repurchased** during the quarter ended March 29, 2019[233](index=233&type=chunk) - As of March 29, 2019, **$280,358,086 remained available** under the $300 million stock repurchase program approved on February 21, 2018[233](index=233&type=chunk)[234](index=234&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine Safety Disclosures are **not applicable**[236](index=236&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL documents - Key exhibits include:[237](index=237&type=chunk) - Severance Agreement (10.1**)[237](index=237&type=chunk) - CEO and CFO Certifications (31.1**, 31.2**, 32**)[237](index=237&type=chunk) - XBRL Instance Document and Taxonomy Extension Documents (101.INS***, 101.SCH***, 101.CAL***, 101.DEF***, 101.LAB***, 101.PRE***) for financial statements and notes[237](index=237&type=chunk) [Signatures](index=48&type=section&id=Signatures) The report is signed by the President & COO and the Senior Vice President & CFO as of April 30, 2019 - The report was signed by Youssef Zakharia (President & COO) and Eduardo Bezerra (SVP & CFO) on April 30, 2019[241](index=241&type=chunk)[242](index=242&type=chunk)

PART I This section provides an overview of Fresh Del Monte's business, including its operations, products, logistics, and market presence, along with a detailed analysis of associated risk factors [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Fresh Del Monte is a global, vertically integrated producer and marketer of fresh and prepared food products, expanding through acquisitions and cost control - Fresh Del Monte Produce Inc. was incorporated in the Cayman Islands on August 29, 1996, and is a holding company. The Abu-Ghazaleh family directly owned approximately **36.5%** of outstanding Ordinary Shares as of December 28, 2018[16](index=16&type=chunk) - The company's global business involves worldwide sourcing, transportation, and marketing of fresh and fresh-cut produce, along with prepared food products in Europe, North America, Africa, and the Middle East[18](index=18&type=chunk) - In February 2018, Fresh Del Monte acquired Mann Packing Co., Inc. for **$357.2 million**, expanding its fresh and value-added vegetable product offerings in North America. This acquisition was funded by a promissory note and cash[19](index=19&type=chunk) - In May 2018, the company acquired a **10%** equity interest in The Purple Carrot, a plant-based meal kit provider, for **$4.2 million**, aiming to diversify its business and leverage its distribution network[20](index=20&type=chunk) - In June 2018, Fresh Del Monte acquired a **70%** interest in an herb farm in Jordan for **$1.7 million** as part of its diversification strategy[21](index=21&type=chunk) Capital Expenditures (2017-2018) | Year | Total Capital Expenditures (Millions USD) | | :--- | :---------------------------------------- | | 2018 | $150.5 | | 2017 | $138.5 | - Planned capital expenditures for 2019 include expansion and improvement of production facilities in North America (Mann Packing), Costa Rica, Philippines, Chile, Guatemala, Mexico, Panama, Kenya, and Jordan, as well as distribution and fresh-cut facilities in the U.S., Europe, and Asia. The company also expects additional payments for six new refrigerated container ships to be delivered starting in 2020[25](index=25&type=chunk) - Fresh Del Monte is the largest marketer of fresh pineapples worldwide, the third-largest marketer of bananas worldwide, and a leading marketer of branded fresh-cut fruit and vegetables in various regions[27](index=27&type=chunk) - North America is the company's largest market, accounting for **64%** of net sales in 2018, followed by Europe (**15%**), the Middle East (**10%**), and Asia (**10%**)[31](index=31&type=chunk) - In 2018, **45%** of fresh produce sold was grown on company-controlled farms, and **55%** was acquired from independent growers. Costa Rica is the most significant sourcing location, representing approximately **34%** of total fresh produce sales volume[33](index=33&type=chunk) Net Sales by Product Category (2016-2018) | Product Category | 2018 Net Sales (Millions USD) | 2018 % of Total | 2017 Net Sales (Millions USD) | 2017 % of Total | 2016 Net Sales (Millions USD) | 2016 % of Total | | :----------------------- | :---------------------------- | :-------------- | :---------------------------- | :-------------- | :---------------------------- | :-------------- | | Other fresh produce | $2,443.0 | 54% | $1,997.2 | 49% | $1,852.6 | 46% | | Banana | $1,703.1 | 38% | $1,775.1 | 43% | $1,811.5 | 45% | | Prepared food | $347.8 | 8% | $313.6 | 8% | $347.4 | 9% | | **Total** | **$4,493.9** | **100%** | **$4,085.9** | **100%** | **$4,011.5** | **100%** | - The company operates a vertically integrated logistics network, including nine owned and seven chartered refrigerated ships, four port facilities in the U.S., 47 distribution centers, and 22 fresh-cut facilities worldwide[28](index=28&type=chunk)[30](index=30&type=chunk)[78](index=78&type=chunk) - Research and development efforts focus on reducing pesticide costs, using biological agents, testing new fruit varieties for improved yield and resistance, and improving post-harvest handling. Total R&D expenses were **$3.2 million** in 2018, **$3.3 million** in 2017, and **$3.3 million** in 2016[118](index=118&type=chunk)[121](index=121&type=chunk) - The company holds a worldwide, perpetual, royalty-free license to use the DEL MONTE® brand for fresh fruit, fresh vegetables, and other fresh and fresh-cut produce. It also has a perpetual, royalty-free license for prepared foods and beverages in Europe, Africa, the Middle East, and certain Central Asian countries[122](index=122&type=chunk)[123](index=123&type=chunk) - The company's results are seasonal, with a greater portion of net sales and gross profit historically realized in the first two calendar quarters due to seasonal demand and pricing fluctuations for fresh produce like bananas and melons[125](index=125&type=chunk) - As of year-end 2018, Fresh Del Monte had approximately **40,500 employees** worldwide, with about **97%** in production locations[128](index=128&type=chunk) [History and Development of Fresh Del Monte](index=5&type=section&id=History%20and%20Development%20of%20Fresh%20Del%20Monte) [Business Overview](index=6&type=section&id=Business%20Overview) [Products Sourcing and Production](index=7&type=section&id=Products%20Sourcing%20and%20Production) [Product Categories](index=8&type=section&id=Product%20Categories) [Bananas](index=8&type=section&id=Bananas) [Gold Pineapples](index=9&type=section&id=Gold%20Pineapples) [Fresh-Cut Produce (Fruit and Vegetables)](index=9&type=section&id=Fresh-Cut%20Produce%20%28Fruit%20and%20Vegetables%29) [Non-Tropical Fruit](index=10&type=section&id=Non-Tropical%20Fruit) [Avocados](index=10&type=section&id=Avocados) [Melons](index=10&type=section&id=Melons) [Tomatoes](index=11&type=section&id=Tomatoes) [Vegetables](index=11&type=section&id=Vegetables) [Other Fruit, Products and Services](index=11&type=section&id=Other%20Fruit%2C%20Products%20and%20Services) [Prepared Food](index=11&type=section&id=Prepared%20Food) [Logistics Operations](index=12&type=section&id=Logistics%20Operations) [Sales and Marketing](index=13&type=section&id=Sales%20and%20Marketing) [North America](index=13&type=section&id=North%20America) [Europe](index=14&type=section&id=Europe) [Middle East and North Africa](index=14&type=section&id=Middle%20East%20and%20North%20Africa) [Asia](index=15&type=section&id=Asia) [South America](index=15&type=section&id=South%20America) [Competition](index=15&type=section&id=Competition) [Quality Assurance](index=16&type=section&id=Quality%20Assurance) [Government Regulation](index=16&type=section&id=Government%20Regulation) [Environmental Proceedings](index=17&type=section&id=Environmental%20Proceedings) [Research and Development, Patents and Licenses, Etc.](index=17&type=section&id=Research%20and%20Development%2C%20Patents%20and%20Licenses%2C%20Etc.) [Seasonality](index=18&type=section&id=Seasonality) [Employees](index=19&type=section&id=Employees) [Organizational Structure](index=19&type=section&id=Organizational%20Structure) [Website Access to Reports](index=19&type=section&id=Website%20Access%20to%20Reports) [Item 1A. Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from price declines, seasonality, weather, intense competition, currency volatility, operational costs, and indebtedness - Profitability is highly dependent on sales prices and volumes of bananas, pineapples, and other fresh produce, which are subject to unpredictable declines due to supply/demand imbalances and increasing consolidation among food retailers[134](index=134&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) - Operating results are seasonal, with a greater portion of gross profit realized in the first two quarters of each year due to fluctuating supply and demand for fresh produce[138](index=138&type=chunk)[139](index=139&type=chunk) - Crop disease, severe weather (floods, droughts, hurricanes), and natural disasters (earthquakes) can lead to substantial losses and increased unit production costs, particularly for premium products like Del Monte Gold® Extra Sweet pineapple, which is largely grown in one region[140](index=140&type=chunk)[141](index=141&type=chunk) - The fresh produce and prepared food markets are highly competitive, with competition from multinational, regional, and small producers. Entry barriers are low for bananas, leading to significant price fluctuations[143](index=143&type=chunk)[101](index=101&type=chunk) - The company is exposed to material currency exchange risks, as a significant portion of net sales (**30%** in 2018) and costs are denominated in non-U.S. dollar currencies. Fluctuations can negatively impact operating results[144](index=144&type=chunk) - The strategy of diversifying product lines, expanding into new geographic markets, and increasing value-added services may not be successful, potentially leading to asset impairments (e.g., **$11.3 million** trademark impairment in 2018 for prepared food segment)[145](index=145&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk) - Sales to Wal-Mart, Inc., the largest customer, accounted for approximately **10%** of total net sales in 2018, and the top 10 customers accounted for **31%**, making the company vulnerable to changes in their purchasing patterns or financial difficulties[152](index=152&type=chunk) - Increased prices for fuel, packaging materials (containerboard, plastic, resin, tin plate), and short-term refrigerated ship charter rates can significantly increase costs. In 2018, fuel costs increased **30%**, containerboard **12%**, and fertilizer **10%**, leading to a **$38.3 million** increase in cost of products sold[153](index=153&type=chunk)[154](index=154&type=chunk) - The company is subject to product contamination and liability claims, which could result in consumer injury, negative publicity, and significant uninsured cash outlays[157](index=157&type=chunk)[159](index=159&type=chunk) - Legal and environmental risks, including the Kunia Well Site cleanup (estimated **$13.5 million** liability as of Dec 28, 2018) and DBCP litigation, could require significant cash outlays and adversely affect financial condition[160](index=160&type=chunk)[161](index=161&type=chunk) - Operating in numerous countries exposes the company to political, economic, and regulatory risks, including import/export duties, currency restrictions, expropriation, and burdensome taxation (e.g., EU banana import regulations, minimum export prices in Costa Rica and Ecuador)[167](index=167&type=chunk)[168](index=168&type=chunk) - The company's indebtedness could limit financial and operating flexibility, with **$662.4 million** in total debt as of December 28, 2018. Covenants in credit agreements restrict dividend payments and other activities[178](index=178&type=chunk)[182](index=182&type=chunk)[222](index=222&type=chunk) - The Abu-Ghazaleh family, as principal shareholders, directly owned **36.2%** of outstanding Ordinary Shares as of February 8, 2019, and can significantly influence management, board elections, and other shareholder matters, potentially delaying or preventing a change in control[184](index=184&type=chunk) [Declines in sales prices for bananas, pineapples and other fresh produce](index=20&type=section&id=Declines%20in%20sales%20prices%20for%20bananas%2C%20pineapples%20and%20other%20fresh%20produce) [Due to fluctuations in the supply of and demand for fresh produce, our results of operations are seasonal, and we realize a greater portion of our net sales and gross profit during the first two quarters of each year.](index=20&type=section&id=Due%20to%20fluctuations%20in%20the%20supply%20of%20and%20demand%20for%20fresh%20produce%2C%20our%20results%20of%20operations%20are%20seasonal%2C%20and%20we%20realize%20a%20greater%20portion%20of%20our%20net%20sales%20and%20gross%20profit%20during%20the%20first%20two%20quarters%20of%20each%20year.) [Crop disease, severe weather, natural disasters and other conditions affecting the environment, including the effects of climate change, could result in substantial losses and weaken our financial condition.](index=20&type=section&id=Crop%20disease%2C%20severe%20weather%2C%20natural%20disasters%20and%20other%20conditions%20affecting%20the%20environment%2C%20including%20the%20effects%20of%20climate%20change%2C%20could%20result%20in%20substantial%20losses%20and%20weaken%20our%20financial%20condition.) [The fresh produce and prepared food markets in which we operate are highly competitive.](index=21&type=section&id=The%20fresh%20produce%20and%20prepared%20food%20markets%20in%20which%20we%20operate%20are%20highly%20competitive.) [We are subject to material currency exchange risks because our operations involve transactions denominated in various currencies.](index=21&type=section&id=We%20are%20subject%20to%20material%20currency%20exchange%20risks%20because%20our%20operations%20involve%20transactions%20denominated%20in%20various%20currencies.) [Our strategy of diversifying our product line, expanding into new geographic markets and increasing the value-added services that we provide to our customers may not be successful.](index=21&type=section&id=Our%20strategy%20of%20diversifying%20our%20product%20line%2C%20expanding%20into%20new%20geographic%20markets%20and%20increasing%20the%20value-added%20services%20that%20we%20provide%20to%20our%20customers%20may%20not%20be%20successful.) [Demand for our products is subject to changing consumer preferences.](index=22&type=section&id=Demand%20for%20our%20products%20is%20subject%20to%20changing%20consumer%20preferences.) [The loss of one or more of our largest customers, or a reduction in the level of purchases made by these customers, could negatively impact our sales and profits.](index=22&type=section&id=The%20loss%20of%20one%20or%20more%20of%20our%20largest%20customers%2C%20or%20a%20reduction%20in%20the%20level%20of%20purchases%20made%20by%20these%20customers%2C%20could%20negatively%20impact%20our%20sales%20and%20profits.) [Increased prices for fuel, packaging materials or short-term refrigerated ship charter rates could increase our costs significantly.](index=22&type=section&id=Increased%20prices%20for%20fuel%2C%20packaging%20materials%20or%20short-term%20refrigerated%20ship%20charter%20rates%20could%20increase%20our%20costs%20significantly.) [We are subject to the risk of product contamination and product liability claims.](index=22&type=section&id=We%20are%20subject%20to%20the%20risk%20of%20product%20contamination%20and%20product%20liability%20claims.) [We are subject to legal and environmental risks that could result in significant cash outlays.](index=23&type=section&id=We%20are%20subject%20to%20legal%20and%20environmental%20risks%20that%20could%20result%20in%20significant%20cash%20outlays.) [Environmental and other regulation of our business, including potential climate change regulation, could adversely impact us by increasing our production cost or restricting our ability to import certain products into the United States.](index=23&type=section&id=Environmental%20and%20other%20regulation%20of%20our%20business%2C%20including%20potential%20climate%20change%20regulation%2C%20could%20adversely%20impact%20us%20by%20increasing%20our%20production%20cost%20or%20restricting%20our%20ability%20to%20import%20certain%20products%20into%20the%20United%20States.) [We are exposed to political, economic and other risks from operating a multinational business.](index=24&type=section&id=We%20are%20exposed%20to%20political%2C%20economic%20and%20other%20risks%20from%20operating%20a%20multinational%20business.) [Acts or omissions of other companies could adversely affect the value of the DEL MONTE® brand.](index=24&type=section&id=Acts%20or%20omissions%20of%20other%20companies%20could%20adversely%20affect%20the%20value%20of%20the%20DEL%20MONTE%C2%AE%20brand.) [Our success depends on the services of our senior executives, the loss of whom could disrupt our operations.](index=24&type=section&id=Our%20success%20depends%20on%20the%20services%20of%20our%20senior%20executives%2C%20the%20loss%20of%20whom%20could%20disrupt%20our%20operations.) [We may not be able to successfully consummate and manage ongoing acquisition, joint venture and business partnership activities, which could have an impact on our results.](index=24&type=section&id=We%20may%20not%20be%20able%20to%20successfully%20consummate%20and%20manage%20ongoing%20acquisition%2C%20joint%20venture%20and%20business%20partnership%20activities%2C%20which%20could%20have%20an%20impact%20on%20our%20results.) [We face risks in connection with our acquisition of Mann Packing.](index=25&type=section&id=We%20face%20risks%20in%20connection%20with%20our%20acquisition%20of%20Mann%20Packing.) [Our indebtedness could limit our financial and operating flexibility and subject us to other risks.](index=25&type=section&id=Our%20indebtedness%20could%20limit%20our%20financial%20and%20operating%20flexibility%20and%20subject%20us%20to%20other%20risks.) [We are controlled by our principal shareholders.](index=26&type=section&id=We%20are%20controlled%20by%20our%20principal%20shareholders.) [A substantial number of our Ordinary Shares are available for sale in the public market, and sales of those shares could adversely affect our share price.](index=26&type=section&id=A%20substantial%20number%20of%20our%20Ordinary%20Shares%20are%20available%20for%20sale%20in%20the%20public%20market%2C%20and%20sales%20of%20those%20shares%20could%20adversely%20affect%20our%20share%20price.) [Our organizational documents contain a variety of anti-takeover provisions that could delay, deter or prevent a change in control.](index=26&type=section&id=Our%20organizational%20documents%20contain%20a%20variety%20of%20anti-takeover%20provisions%20that%20could%20delay%2C%20deter%20or%20prevent%20a%20change%20in%20control.) [Our shareholders have limited rights under Cayman Islands law.](index=26&type=section&id=Our%20shareholders%20have%20limited%20rights%20under%20Cayman%20Islands%20law.) [Item 1B. Unresolved Staff Comments](index=27&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[192](index=192&type=chunk) [Item 2. Properties](index=27&type=section&id=Item%202.%20Properties) Fresh Del Monte owns and leases extensive agricultural land, distribution, and manufacturing facilities globally, with ongoing investments in infrastructure and maritime assets Plantation Acreage Under Production (End of 2018) | Location | Acres Owned | Acres Leased | Products | | :------------ | :---------- | :----------- | :--------------------------------------- | | Costa Rica | 44,510 | 5,983 | Bananas, Pineapples, Melons | | Guatemala | 8,980 | 4,616 | Bananas, Melons | | Brazil | 2,402 | — | Bananas, Other Crops | | Chile | 3,180 | 1,680 | Non-Tropical Fruit | | Kenya | — | 10,892 | Pineapples | | Philippines | — | 17,315 | Bananas, Pineapples | | Uruguay | 4,169 | — | Citrus | | United States | 4,223 | 3,994 | Melons, Tomatoes and Other Crops | - In North America, the company operates **30 distribution centers** (14 with fresh-cut facilities), owning 12 and leasing 18. It also operates four leased port facilities with cold storage. Following the Mann Packing acquisition, it leases two and owns one production facility in Salinas Valley, California, and is constructing a new plant in Gonzales, California[193](index=193&type=chunk) - In Central America, the company owns a juice processing plant and an IQF fruit processing plant in Costa Rica. It is developing a banana operation on leased land in Panama, aiming for approximately **11,000 acres**, with **3,500 acres** under development by end of 2018[196](index=196&type=chunk)[197](index=197&type=chunk) - In the Middle East, the company owns an integrated poultry business in Jordan and a combined distribution/manufacturing center in Dubai, UAE. It also operates two distribution centers in Saudi Arabia through a **60%**-owned joint venture[200](index=200&type=chunk) - The company's maritime assets include a fleet of **nine owned** and **seven chartered** refrigerated ships, approximately **6,000 refrigerated container units**, and **301 trucks** and refrigerated trailers in the U.S., plus **360 trucks** in the Middle East[201](index=201&type=chunk) - Planned capital expenditures for 2019 include expansion and improvement of production facilities in North America (Mann Packing), Costa Rica, Philippines, Chile, Guatemala, Mexico, Panama, Kenya, and Jordan, as well as distribution and fresh-cut facilities in the U.S., Europe, and Asia. Additional payments are expected for six new container ships scheduled for delivery starting in 2020[204](index=204&type=chunk) [Acres Under Production](index=27&type=section&id=Acres%20Under%20Production) [North America](index=27&type=section&id=North%20America) [Europe](index=27&type=section&id=Europe) [Asia](index=27&type=section&id=Asia) [Central America](index=27&type=section&id=Central%20America) [South America](index=28&type=section&id=South%20America) [Africa](index=28&type=section&id=Africa) [Middle East](index=28&type=section&id=Middle%20East) [Maritime and Other Equipment (including Containers)](index=28&type=section&id=Maritime%20and%20Other%20Equipment%20%28including%20Containers%29) [Other Properties](index=28&type=section&id=Other%20Properties) [Item 3. Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) The company refers to Note 17, 'Litigation' in the Consolidated Financial Statements for details on legal proceedings - Legal proceedings are detailed in Note 17, 'Litigation' to the Consolidated Financial Statements[205](index=205&type=chunk) [Item 4. Mine Safety Disclosure](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company - Item 4. Mine Safety Disclosure is not applicable[206](index=206&type=chunk) PART II This section covers market information for the company's common equity, selected financial data, management's discussion and analysis, and market risk disclosures [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) FDP Ordinary Shares trade on NYSE; the company underperformed market indexes over five years and initiated a $300 million share repurchase program - Fresh Del Monte's Ordinary Shares are traded on the New York Stock Exchange (NYSE) under the symbol FDP since October 24, 1997[209](index=209&type=chunk) - As of February 8, 2019, there were **66 shareholders** of record[210](index=210&type=chunk) Cumulative Five-Year Total Return (12/27/2013 - 12/28/2018) | Category | 12/27/2013 | 12/26/2014 | 1/1/2016 | 12/30/2016 | 12/29/2017 | 12/28/2018 | | :--------------------------- | :--------- | :--------- | :------- | :--------- | :--------- | :--------- | | Fresh Del Monte Produce Inc. | 100.00 | 120.58 | 141.23 | 222.53 | 177.01 | 106.22 | | S&P 500 | 100.00 | 113.69 | 115.26 | 129.05 | 157.22 | 150.33 | | S&P 500 Food Products | 100.00 | 110.16 | 125.32 | 141.10 | 139.33 | 113.89 | - On February 21, 2018, the Board of Directors approved a three-year repurchase program of up to **$300 million** of ordinary shares. For the year ended December 28, 2018, the company repurchased and retired **730,532 ordinary shares** for **$29.4 million**[216](index=216&type=chunk)[217](index=217&type=chunk)[816](index=816&type=chunk)[817](index=817&type=chunk) [Ordinary Share Prices and Related Matters](index=29&type=section&id=Ordinary%20Share%20Prices%20and%20Related%20Matters) [Shareholders](index=29&type=section&id=Shareholders) [Performance Graph](index=30&type=section&id=Performance%20Graph) [Share Repurchase Program](index=31&type=section&id=Share%20Repurchase%20Program) [Item 6. Selected Financial Data](index=32&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year financial overview, showing declining net income and gross profit in 2018, alongside increased total debt Selected Financial Data (2014-2018) | Metric | 2018 | 2017 | 2016 | 2015 | 2014 | | :------------------------------------------------------------------ | :---------- | :---------- | :---------- | :---------- | :---------- | | **Statement of Income Data (Millions USD):** | | | | | | | Net sales | $4,493.9 | $4,085.9 | $4,011.5 | $4,056.5 | $3,927.5 | | Cost of products sold | $4,214.1 | $3,754.3 | $3,550.1 | $3,714.2 | $3,562.7 | | Gross profit | $279.8 | $331.6 | $461.4 | $342.3 | $364.8 | | Selling, general and administrative expenses | $194.7 | $173.2 | $187.4 | $183.9 | $175.8 | | (Gain) loss on disposal of property, plant and equipment | $(7.1) | $3.0 | — | $(2.1) | $4.3 | | Goodwill and trademark impairment charges | $11.3 | $0.9 | $2.6 | $66.1 | — | | Asset impairment and other charges, net | $42.3 | $1.8 | $27.2 | $3.4 | $11.2 | | Operating income | $38.6 | $152.7 | $244.2 | $91.0 | $173.5 | | Interest expense, net | $22.7 | $5.6 | $3.4 | $3.7 | $2.6 | | Other expense, net | $15.7 | $3.0 | $3.4 | $7.2 | $12.0 | | Income before income taxes | $0.2 | $144.1 | $237.4 | $80.1 | $158.9 | | Provision for income taxes | $16.1 | $24.9 | $11.8 | $13.7 | $14.3 | | Net (loss) income | $(15.9) | $119.2 | $225.6 | $66.4 | $144.6 | | Net (loss) income attributable to Fresh Del Monte Produce Inc. | $(21.9) | $120.8 | $225.1 | $62.4 | $142.4 | | Net (loss) income per ordinary share attributable to Fresh Del Monte Produce Inc. - Basic | $(0.45) | $2.40 | $4.37 | $1.18 | $2.54 | | Net (loss) income per ordinary share attributable to Fresh Del Monte Produce Inc. - Diluted | $(0.45) | $2.39 | $4.33 | $1.17 | $2.53 | | Dividends declared per ordinary share | $0.60 | $0.60 | $0.55 | $0.50 | $0.50 | | **Balance Sheet Data (at period end, Millions USD):** | | | | | | | Cash and cash equivalents | $21.3 | $25.1 | $20.1 | $24.9 | $34.1 | | Working capital | $552.8 | $626.0 | $592.0 | $604.0 | $631.5 | | Total assets | $3,255.2 | $2,766.9 | $2,653.3 | $2,596.1 | $2,675.3 | | Total debt | $662.4 | $357.6 | $232.3 | $254.2 | $266.9 | | Shareholders' equity | $1,717.8 | $1,791.2 | $1,816.4 | $1,750.9 | $1,787.9 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial performance, liquidity, and capital resources, detailing the impact of acquisitions, currency, and market dynamics on operational results - The company's strategy combines maximizing existing infrastructure, entering new markets, and strict cost control, aiming for sales growth through increased volume and per-unit prices, particularly in fresh produce and expanding into growth markets like the Middle East and Africa[225](index=225&type=chunk) - Net sales in 2018 increased by **$408.0 million** to **$4,493.9 million**, primarily driven by higher sales in other fresh produce and prepared food segments, partially offset by lower banana sales. The Mann Packing acquisition significantly contributed to this increase[257](index=257&type=chunk)[228](index=228&type=chunk) - Cost of products sold increased by **$459.8 million** to **$4,214.1 million** in 2018, largely due to the Mann Packing acquisition (**$452.7 million**), higher fruit costs, increased distribution costs (trucking rates), and higher fuel and containerboard costs[267](index=267&type=chunk)[232](index=232&type=chunk) - Gross profit decreased by **$51.8 million** to **$279.8 million** in 2018, mainly due to lower gross profit in the banana and prepared food segments, partially offset by a slight increase in other fresh produce[268](index=268&type=chunk) - Selling, general and administrative expenses rose by **$21.5 million** to **$194.7 million** in 2018, primarily due to the Mann Packing acquisition and unfavorable exchange rates in Europe, partially offset by lower executive compensation and legal expenses[276](index=276&type=chunk) - The company recorded a **$7.1 million** gain on disposal of property, plant, and equipment in 2018, mainly from selling surplus land, a refrigerated vessel, and other assets, partially offset by losses on low-yielding banana and non-tropical plants[237](index=237&type=chunk)[277](index=277&type=chunk) - Goodwill and trademark impairment charges totaled **$11.3 million** in 2018, related to the DEL MONTE® perpetual, royalty-free brand name license for prepared foods due to lower-than-expected sales and pricing[238](index=238&type=chunk)[278](index=278&type=chunk) - Asset impairment and other charges, net, amounted to **$42.3 million** in 2018, including **$32.3 million** for abandoning low-yield banana areas in the Philippines, **$4.1 million** for Mann Packing acquisition-related expenses, and charges for restructuring and underutilized assets[240](index=240&type=chunk)[280](index=280&type=chunk) - Interest expense increased by **$17.2 million** to **$23.6 million** in 2018, driven by higher average debt balances from the Mann Packing acquisition and increased interest rates[242](index=242&type=chunk)[284](index=284&type=chunk) - Net cash provided by operating activities increased by **$52.4 million** to **$246.6 million** in 2018, mainly due to higher accounts payable and accrued expenses from improved cash management, despite lower net income and higher receivables/inventories[315](index=315&type=chunk) - Working capital decreased by **$73.2 million** to **$552.8 million** at December 28, 2018, primarily due to higher accounts payable and accrued expenses, partially offset by increases in accounts receivable, inventories, and assets held for sale[317](index=317&type=chunk) - Net cash used in investing activities was **$494.8 million** in 2018, including **$150.5 million** in capital expenditures, **$357.5 million** for business purchases (Mann Packing, herb farm), and **$4.2 million** for unconsolidated investments (Purple Carrot)[318](index=318&type=chunk)[319](index=319&type=chunk) - Net cash provided by financing activities was **$242.0 million** in 2018, mainly from **$304.5 million** in net borrowings on long-term debt, partially offset by share repurchases (**$29.4 million**) and dividends paid (**$29.0 million**)[327](index=327&type=chunk)[328](index=328&type=chunk) - The company's credit facility was increased from **$800.0 million** to **$1.1 billion** in February 2018, and certain covenant ratios were amended in September 2018. As of December 28, 2018, **$661.3 million** was outstanding under the facility, and the company was in compliance with all covenants[331](index=331&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) - Due to not meeting certain leverage ratios, the Board of Directors is expected to temporarily suspend the quarterly cash dividend[332](index=332&type=chunk) - The company is involved in tax examinations in two foreign jurisdictions with proposed income tax deficiencies of approximately **$141.4 million** (including interest and penalties) for tax years 2012-2016, which it is vigorously contesting[341](index=341&type=chunk) Contractual Obligations by Period (as of December 28, 2018) | Contractual Obligations | Total (Millions USD) | Less than 1 year (Millions USD) | 1-3 years (Millions USD) | 3-5 years (Millions USD) | More than 5 years (Millions USD) | | :------------------------------- | :------------------- | :------------------------------ | :----------------------- | :----------------------- | :------------------------------- | | Fruit purchase agreements | $1,044.1 | $312.8 | $592.0 | $139.3 | — | | Purchase obligations | $360.5 | $228.4 | $122.8 | $1.7 | $7.6 | | Operating leases & charter agreements | $219.0 | $64.2 | $54.0 | $31.7 | $69.1 | | Capital lease obligations | $1.1 | $0.5 | $0.6 | — | — | | Long-term debt | $661.3 | — | $661.3 | — | — | | Interest on long-term debt & capital lease | $62.6 | — | $62.6 | — | — | | Retirement benefits | $99.1 | $11.3 | $19.4 | $19.2 | $49.2 | | Uncertain tax positions | $3.4 | $0.2 | $1.1 | — | $2.1 | | **Totals** | **$2,451.1** | **$617.4** | **$1,513.8** | **$191.9** | **$128.0** | [Overview](index=34&type=section&id=Overview) [Strategy](index=34&type=section&id=Strategy) [Net Sales](index=34&type=section&id=Net%20Sales) [Cost of Products Sold](index=35&type=section&id=Cost%20of%20Products%20Sold) [Selling, General and Administrative Expenses](index=35&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) [(Gain) Loss on Disposal of Property, Plant and Equipment](index=36&type=section&id=%28Gain%29%20Loss%20on%20Disposal%20of%20Property%2C%20Plant%20and%20Equipment) [Goodwill and Trademark Impairment Charges](index=36&type=section&id=Goodwill%20and%20Trademark%20Impairment%20Charges) [Asset Impairment and Other Charges, Net](index=36&type=section&id=Asset%20Impairment%20and%20Other%20Charges%2C%20Net) [Interest Expense](index=36&type=section&id=Interest%20Expense) [Other Expense, Net](index=36&type=section&id=Other%20Expense%2C%20Net) [Provision for Income Taxes](index=36&type=section&id=Provision%20for%20Income%20Taxes) [Tax reform](index=37&type=section&id=Tax%20reform) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) [2018 Compared with 2017](index=38&type=section&id=2018%20Compared%20with%202017) [2017 Compared with 2016](index=41&type=section&id=2017%20Compared%20with%202016) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) [Critical Accounting Policies and Estimates](index=48&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) [Revenue Recognition](index=48&type=section&id=Revenue%20Recognition) [Growing Crops](index=48&type=section&id=Growing%20Crops) [Share-Based Compensation](index=48&type=section&id=Share-Based%20Compensation) [Goodwill and Indefinite-Lived Intangible Assets](index=49&type=section&id=Goodwill%20and%20Indefinite-Lived%20Intangible%20Assets) [Impairment of Long-Lived Assets](index=50&type=section&id=Impairment%20of%20Long-Lived%20Assets) [Income Taxes](index=50&type=section&id=Income%20Taxes) [Contingencies](index=50&type=section&id=Contingencies) [Environmental Remediation Liabilities](index=50&type=section&id=Environmental%20Remediation%20Liabilities) [Derivative Financial Instruments](index=50&type=section&id=Derivative%20Financial%20Instruments) [Fair Value Measurements](index=51&type=section&id=Fair%20Value%20Measurements) [New Accounting Pronouncements](index=52&type=section&id=New%20Accounting%20Pronouncements) [Trend Information](index=53&type=section&id=Trend%20Information) [Tabular Disclosure of Contractual Obligations](index=54&type=section&id=Tabular%20Disclosure%20of%20Contractual%20Obligations) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=55&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages market risks from currency and interest rate fluctuations using derivatives, with a 10% USD strengthening impacting net sales by $136.6 million - The company is exposed to market risk from changes in currency exchange rates and interest rates, which are managed through operating activities, financing, and derivative financial instruments[405](index=405&type=chunk)[406](index=406&type=chunk) - Approximately **30%** of net sales and a significant portion of costs in 2018 were denominated in non-U.S. dollar currencies, making results sensitive to exchange rate fluctuations[407](index=407&type=chunk) - A hypothetical **10%** strengthening of the U.S. dollar in 2018 would have decreased net sales by approximately **$136.6 million**[409](index=409&type=chunk) - Total variable rate debt had carrying values of **$661.3 million** in 2018. A hypothetical **10%** increase in interest rates for 2018 would have resulted in a negative impact of approximately **$2.7 million** on results of operations[412](index=412&type=chunk) - The company uses interest rate swaps to hedge against variable interest rate fluctuations on a portion of its LIBOR-based borrowings, with a notional value of **$400.0 million** outstanding at December 28, 2018[413](index=413&type=chunk)[414](index=414&type=chunk) [Exchange Rate Risk](index=55&type=section&id=Exchange%20Rate%20Risk) [Interest Rate Risk](index=55&type=section&id=Interest%20Rate%20Risk) [Item 8. Financial Statements and Supplementary Data](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains audited consolidated financial statements, including balance sheets, income, cash flow, and equity statements, along with management and auditor reports and detailed notes - Management concluded that internal control over financial reporting was effective as of December 28, 2018, excluding Mann Packing Co., Inc. due to its acquisition during the fiscal year[422](index=422&type=chunk) - Ernst & Young LLP issued an unqualified opinion on the effectiveness of internal control over financial reporting and on the consolidated financial statements as of December 28, 2018[427](index=427&type=chunk)[429](index=429&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk) Consolidated Balance Sheets (Millions USD) | Assets | 2018 | 2017 | | :------------------------------------------------------------------------------------------------------------------------------ | :---------- | :---------- | | **Current assets:** | | | | Cash and cash equivalents | $21.3 | $25.1 | | Trade accounts receivable, net | $378.3 | $358.8 | | Other accounts receivable, net | $95.2 | $73.6 | | Inventories, net | $565.3 | $541.8 | | Assets held for sale | $45.4 | — | | Prepaid expenses and other current assets | $33.3 | $20.5 | | **Total current assets** | **$1,138.8**| **$1,019.8**| | Investments in and advances to unconsolidated companies | $6.1 | $2.0 | | Property, plant and equipment, net | $1,392.2 | $1,328.3 | | Goodwill | $423.4 | $261.9 | | Intangible assets, net | $166.9 | $45.9 | | Deferred income taxes | $68.1 | $59.1 | | Other noncurrent assets | $59.7 | $49.9 | | **Total assets** | **$3,255.2**| **$2,766.9**| | **Liabilities, redeemable noncontrolling interest and shareholders' equity** | | | | **Current liabilities:** | | | | Accounts payable and accrued expenses | $576.6 | $382.4 | | Current portion of long-term debt and capital lease obligations | $0.5 | $0.6 | | Income taxes and other taxes payable | $8.9 | $10.8 | | **Total current liabilities** | **$586.0** | **$393.8** | | Long-term debt and capital lease obligations | $661.9 | $357.0 | | Retirement benefits | $91.3 | $96.2 | | Other noncurrent liabilities | $53.4 | $42.4 | | Deferred income taxes | $93.0 | $86.3 | | **Total liabilities** | **$1,485.6**| **$975.7** | | Redeemable noncontrolling interest | $51.8 | — | | **Shareholders' equity:** | | | | Ordinary shares | $0.5 | $0.5 | | Paid-in capital | $527.1 | $522.5 | | Retained earnings | $1,206.0 | $1,275.0 | | Accumulated other comprehensive loss | $(41.6) | $(30.6) | | Total Fresh Del Monte Produce Inc. shareholders' equity | $1,692.0 | $1,767.4 | | Noncontrolling interests | $25.8 | $23.8 | | **Total shareholders' equity** | **$1,717.8**| **$1,791.2**| | **Total liabilities, redeemable noncontrolling interest and shareholders' equity** | **$3,255.2**| **$2,766.9**| Consolidated Statements of Operations (Millions USD, except per share data) | Metric | 2018 | 2017 | 2016 | | :------------------------------------------------------------------ | :---------- | :---------- | :---------- | | Net sales | $4,493.9 | $4,085.9 | $4,011.5 | | Cost of products sold | $4,214.1 | $3,754.3 | $3,550.1 | | Gross profit | $279.8 | $331.6 | $461.4 | | Selling, general and administrative expenses | $194.7 | $173.2 | $187.4 | | (Gain) loss on disposal of property, plant and equipment | $(7.1) | $3.0 | — | | Goodwill and trademarks impairment charges | $11.3 | $0.9 | $2.6 | | Asset impairment and other charges, net | $42.3 | $1.8 | $27.2 | | Operating income | $38.6 | $152.7 | $244.2 | | Interest expense | $23.6 | $6.4 | $4.1 | | Interest income | $0.9 | $0.8 | $0.7 | | Other expense, net | $15.7 | $3.0 | $3.4 | | Income before income taxes | $0.2 | $144.1 | $237.4 | | Provision for income taxes | $16.1 | $24.9 | $11.8 | | Net (loss) income | $(15.9) | $119.2 | $225.6 | | Less: Net income (loss) attributable to redeemable and noncontrolling interests | $6.0 | $(1.6) | $0.5 | | Net (loss) income attributable to Fresh Del Monte Produce Inc. | $(21.9) | $120.8 | $225.1 | | Net (loss) income per ordinary share attributable to Fresh Del Monte Produce Inc. - Basic | $(0.45) | $2.40 | $4.37 | | Net (loss) income per ordinary share attributable to Fresh Del Monte Produce Inc. - Diluted | $(0.45) | $2.39 | $4.33 | | Dividends declared per ordinary share | $0.60 | $0.60 | $0.55 | | Weighted average number of ordinary shares: Basic | 48,625,175 | 50,247,881 | 51,507,755 | | Weighted average number of ordinary shares: Diluted | 48,625,175 | 50,588,708 | 51,962,195 | Consolidated Statements of Cash Flows (Millions USD) | Operating Activities: | 2018 | 2017 | 2016 | | :----------------------------------------------------------------------- | :---------- | :---------- | :---------- | | Net (loss) income | $(15.9) | $119.2 | $225.6 | | Depreciation and amortization | $100.5 | $79.9 | $78.5 | | Share-based compensation expense | $11.5 | $12.1 | $24.9 | | Goodwill and trademark impairment charges | $11.3 | $0.9 | $2.6 | | Asset impairment charges, net | $35.1 | $3.7 | $6.0 | | (Gain) loss on disposal of property, plant and equipment, net | $(7.1) | $3.0 | — | | Changes in operating assets and liabilities, net of acquisitions: | | | | | Receivables | $(2.4) | $(16.9) | $5.8 | | Inventories | $(2.8) | $(49.4) | $(11.8) | | Accounts payable and accrued expenses | $131.3 | $27.0 | $21.1 | | **Net cash provided by operating activities** | **$246.6** | **$194.2** | **$344.6** | | **Investing Activities:** | | | | | Capital expenditures | $(150.5) | $(138.5) | $(146.7) | | Investments in unconsolidated companies | $(4.2) | — | — | | Proceeds from sales of property, plant and equipment | $17.4 | $4.7 | $12.4 | | Purchase of businesses, net of cash acquired | $(357.5) | — | $(9.0) | | **Net cash used in investing activities** | **$(494.8)**| **$(133.8)**| **$(143.3)**| | **Financing Activities:** | | | | | Proceeds from long-term debt | $1,103.1 | $800.2 | $621.9 | | Payments on long-term debt | $(798.6) | $(673.3) | $(648.4) |\ | Repurchase and retirement of ordinary shares | $(29.4) | $(142.0) | $(108.4) |\ | Dividends paid | $(29.0) | $(30.1) | $(28.2) |\ | **Net cash provided (used) in financing activities** | **$242.0** | **$(53.8)** | **$(205.4)**|\ | Net (decrease) increase in cash and cash equivalents | $(3.8) | $5.0 | $(4.8) |\ | Cash and cash equivalents, ending | $21.3 | $25.1 | $20.1 | [Internal Control over Financial Reporting](index=58&type=section&id=Internal%20Control%20over%20Financial%20Reporting) [Report of Independent Registered Certified Public Accounting Firm](index=60&type=section&id=Report%20of%20Independent%20Registered%20Certified%20Public%20Accounting%20Firm) [Consolidated Balance Sheets](index=61&type=section&id=Consolidated%20Balance%20Sheets) [Consolidated Statements of Operations](index=63&type=section&id=Consolidated%20Statements%20of%20Operations) [Consolidated Statements of Comprehensive (Loss) Income](index=64&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) [Consolidated Statements of Cash Flows](index=65&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) [Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interest](index=67&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity%20and%20Redeemable%20Noncontrolling%20Interest) [Notes to Consolidated Financial Statements](index=69&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. General](index=69&type=section&id=1.%20General) [2. Summary of Significant Accounting Policies](index=69&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) [3. Asset Impairment and Other Charges, Net](index=80&type=section&id=3.%20Asset%20Impairment%20and%20Other%20Charges%2C%20Net) [4. Acquisitions](index=83&type=section&id=4.%20Acquisitions) [5. Investments in Unconsolidated Companies](index=86&type=section&id=5.%20Investments%20in%20Unconsolidated%20Companies) [6. Property, Plant and Equipment, Net](index=86&type=section&id=6.%20Property%2C%20Plant%20and%20Equipment%2C%20Net) [7. Goodwill and Other Intangible Assets](index=88&type=section&id=7.%20Goodwill%20and%20Other%20Intangible%20Assets) [8. Financing Receivables](index=91&type=section&id=8.%20Financing%20Receivables) [9. Accounts Payable and Accrued Expenses](index=92&type=section&id=9.%20Accounts%20Payable%20and%20Accrued%20Expenses) [10. Income Taxes](index=93&type=section&id=10.%20Income%20Taxes) [11. Long-Term Debt and Capital Lease Obligations](index=99&type=section&id=11.%20Long-Term%20Debt%20and%20Capital%20Lease%20Obligations) [12. Earnings (Loss) Per Ordinary Share](index=101&type=section&id=12.%20Earnings%20%28Loss%29%20Per%20Ordinary%20Share) [13. Accumulated Other Comprehensive (Loss) Income](index=102&type=section&id=13.%20Accumulated%20Other%20Comprehensive%20%28Loss%29%20Income) [14. Retirement and Other Employee Benefits](index=104&type=section&id=14.%20Retirement%20and%20Other%20Employee%20Benefits) [15. Share-Based Compensation](index=117&type=section&id=15.%20Share-Based%20Compensation) [16. Commitments and Contingencies](index=120&type=section&id=16.%20Commitments%20and%20Contingencies) [17. Litigation](index=121&type=section&id=17.%20Litigation) [18. Derivative Financial Instruments](index=124&type=section&id=18.%20Derivative%20Financial%20Instruments) [19. Fair Value Measurements](index=128&type=section&id=19.%20Fair%20Value%20Measurements) [20. Related Party Transactions](index=131&type=section&id=20.%20Related%20Party%20Transactions) [21. Unaudited Quarterly Financial Information](index=132&type=section&id=21.%20Unaudited%20Quarterly%20Financial%20Information) [22. Business Segment Data](index=133&type=section&id=22.%20Business%20Segment%20Data) [23. Shareholders' Equity](index=136&type=section&id=23.%20Shareholders%27%20Equity) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=138&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with accountants on accounting and financial disclosure - There were no changes in or disagreements with accountants on accounting and financial disclosure[821](index=821&type=chunk) [Item 9A. Controls and Procedures](index=138&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal controls, excluding the Mann Packing acquisition - Disclosure controls and procedures were evaluated and deemed effective as of December 28, 2018[822](index=822&type=chunk) - No material changes in internal control over financial reporting occurred during the year ended December 28, 2018[822](index=822&type=chunk) - The assessment of internal control over financial reporting excluded Mann Packing Co., Inc. due to its acquisition during the fiscal year, as permitted by SEC guidance[422](index=422&type=chunk) [Item 9B. Other Information](index=138&type=section&id=Item%209B.%20Other%20Information) The company reported no other information for this item - There is no other information to report for this item[824](index=824&type=chunk) PART III This section incorporates by reference information on directors, executive compensation, security ownership, related transactions, and principal accountant fees [Item 10. Directors, Executive Officers and Corporate Governance](index=139&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2019 Proxy Statement, with a Code of Conduct in place - Information on directors, executive officers, audit committee financial experts, and Section 16(a) compliance is incorporated by reference from the 2019 Annual General Meeting of Shareholders Proxy Statement[828](index=828&type=chunk) - The company has a Code of Conduct and Business Ethics Policy applicable to all directors, officers, and employees, available on its website. No waivers or amendments were made in 2018[829](index=829&type=chunk) [Item 11. Executive Compensation](index=139&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the definitive Proxy Statement for the 2019 Annual General Meeting of Shareholders - Executive compensation information is incorporated by reference from the 2019 Annual General Meeting of Shareholders Proxy Statement[830](index=830&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=139&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information concerning security ownership of certain beneficial owners and management, and securities authorized for issuance under equity compensation plans, is incorporated by reference from the definitive Proxy Statement for the 2019 Annual General Meeting of Shareholders - Information on security ownership of beneficial owners and management, and equity compensation plans, is incorporated by reference from the 2019 Annual General Meeting of Shareholders Proxy Statement[831](index=831&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=139&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the definitive Proxy Statement for the 2019 Annual General Meeting of Shareholders - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2019 Annual General Meeting of Shareholders Proxy Statement[832](index=832&type=chunk) [Item 14. Principal Accountant Fees and Services](index=139&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information concerning principal accountant fees and services is incorporated by reference from the definitive Proxy Statement for the 2019 Annual General Meeting of Shareholders - Information on principal accountant fees and services is incorporated by reference from the 2019 Annual General Meeting of Shareholders Proxy Statement[833](index=833&type=chunk) PART IV This section details exhibits and financial statement schedules, including various agreements, organizational documents, and certifications [Item 15. Exhibits and Financial Statement Schedules](index=140&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists consolidated financial statements and supplemental schedules from Item 8, along with a comprehensive index of exhibits and certifications - The section includes consolidated financial statements and supplemental schedules as part of Item 8[840](index=840&type=chunk) - A list of exhibits is provided, including the Stock Purchase Agreement for Mann Packing, Amended and Restated Memorandum and Articles of Association, various License Agreements, Registration Rights Agreement, Strategic Alliance Agreement, Share Incentive Plans, and Credit Agreements[836](index=836&type=chunk)[837](index=837&type=chunk)[838](index=838&type=chunk)[842](index=842&type=chunk)[845](index=845&type=chunk)[846](index=846&type=chunk)[847](index=847&type=chunk)[848](index=848&type=chunk)[851](index=851&type=chunk)[853](index=853&type=chunk)[855](index=855&type=chunk)[857](index=857&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer are included, along with XBRL formatted documents[861](index=861&type=chunk)[862](index=862&type=chunk)[863](index=863&type=chunk)[864](index=864&type=chunk)[865](index=865&type=chunk)[866](index=866&type=chunk) [Item 16. Form 10-K Summary](index=144&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the report - Item 16. Form 10-K Summary is not applicable[868](index=868&type=chunk)

Fresh Del Monte Produce, Inc. (NYSE:FDP) Q4 2018 Earnings Conference Call February 19, 2019 11:00 AM ET Company Participants Christine Cannella - Assistant VP, IR Mohammed Abu-Ghazaleh - Chairman & CEO Richard Contreras - SVP & CFO Conference Call Participants Jonathan Feeney - Consumer Edge Research Kane Ossorio - Yost Capital Management Operator Good day, everyone, and welcome to Fresh Del Monte Produce Inc.'s Fourth Quarter and Full Year 2018 Financial Results Call. Today's conference call is being broad ...