Fresh Del Monte Produce (FDP) - 2018 Q4 - Annual Report

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 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] - 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] - 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] - 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] - 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] 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] - 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] - 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] - 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] 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][30][78] - 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][121] - 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][123] - 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] - As of year-end 2018, Fresh Del Monte had approximately 40,500 employees worldwide, with about 97% in production locations[128] History and Development of Fresh Del Monte Business Overview Products Sourcing and Production Product Categories Bananas Gold Pineapples Fresh-Cut Produce (Fruit and Vegetables) Non-Tropical Fruit Avocados Melons Tomatoes Vegetables Other Fruit, Products and Services Prepared Food Logistics Operations Sales and Marketing North America Europe Middle East and North Africa Asia South America Competition Quality Assurance Government Regulation Environmental Proceedings Research and Development, Patents and Licenses, Etc. Seasonality Employees Organizational Structure Website Access to Reports Item 1A. Risk Factors 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][136][137] - 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][139] - 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][141] - 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][101] - 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] - 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][146][148] - 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] - 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][154] - The company is subject to product contamination and liability claims, which could result in consumer injury, negative publicity, and significant uninsured cash outlays[157][159] - 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][161] - 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][168] - 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][182][222] - 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] Declines in sales prices for bananas, pineapples and other fresh produce 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. 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. The fresh produce and prepared food markets in which we operate are highly competitive. We are subject to material currency exchange risks because our operations involve transactions denominated in various currencies. 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. Demand for our products is subject to changing consumer preferences. 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. Increased prices for fuel, packaging materials or short-term refrigerated ship charter rates could increase our costs significantly. We are subject to the risk of product contamination and product liability claims. We are subject to legal and environmental risks that could result in significant cash outlays. 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. We are exposed to political, economic and other risks from operating a multinational business. Acts or omissions of other companies could adversely affect the value of the DEL MONTE® brand. Our success depends on the services of our senior executives, the loss of whom could disrupt our operations. 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. We face risks in connection with our acquisition of Mann Packing. Our indebtedness could limit our financial and operating flexibility and subject us to other risks. We are controlled by our principal shareholders. 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. Our organizational documents contain a variety of anti-takeover provisions that could delay, deter or prevent a change in control. Our shareholders have limited rights under Cayman Islands law. Item 1B. Unresolved Staff Comments The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[192] Item 2. Properties 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] - 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][197] - 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] - 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] - 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] Acres Under Production North America Europe Asia Central America South America Africa Middle East Maritime and Other Equipment (including Containers) Other Properties Item 3. Legal Proceedings 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] Item 4. Mine Safety Disclosure This item is not applicable to the company - Item 4. Mine Safety Disclosure is not applicable[206] 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 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] - As of February 8, 2019, there were 66 shareholders of record[210] 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][217][816][817] Ordinary Share Prices and Related Matters Shareholders Performance Graph Share Repurchase Program Item 6. Selected Financial Data 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 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] - 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][228] - 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][232] - 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] - 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] - 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][277] - 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][278] - 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][280] - 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][284] - 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] - 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] - 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][319] - 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][328] - 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][334][335] - Due to not meeting certain leverage ratios, the Board of Directors is expected to temporarily suspend the quarterly cash dividend[332] - 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] 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 Strategy Net Sales Cost of Products Sold Selling, General and Administrative Expenses (Gain) Loss on Disposal of Property, Plant and Equipment Goodwill and Trademark Impairment Charges Asset Impairment and Other Charges, Net Interest Expense Other Expense, Net Provision for Income Taxes Tax reform Results of Operations 2018 Compared with 2017 2017 Compared with 2016 Liquidity and Capital Resources Critical Accounting Policies and Estimates Revenue Recognition Growing Crops Share-Based Compensation Goodwill and Indefinite-Lived Intangible Assets Impairment of Long-Lived Assets Income Taxes Contingencies Environmental Remediation Liabilities Derivative Financial Instruments Fair Value Measurements New Accounting Pronouncements Trend Information Tabular Disclosure of Contractual Obligations Item 7A. Quantitative and Qualitative Disclosures about Market Risk 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][406] - 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] - A hypothetical 10% strengthening of the U.S. dollar in 2018 would have decreased net sales by approximately $136.6 million[409] - 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] - 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][414] Exchange Rate Risk Interest Rate Risk Item 8. Financial Statements and Supplementary Data 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] - 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][429][437][438] 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 Report of Independent Registered Certified Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive (Loss) Income Consolidated Statements of Cash Flows Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interest Notes to Consolidated Financial Statements 1. General 2. Summary of Significant Accounting Policies 3. Asset Impairment and Other Charges, Net 4. Acquisitions 5. Investments in Unconsolidated Companies 6. Property, Plant and Equipment, Net 7. Goodwill and Other Intangible Assets 8. Financing Receivables 9. Accounts Payable and Accrued Expenses 10. Income Taxes 11. Long-Term Debt and Capital Lease Obligations 12. Earnings (Loss) Per Ordinary Share 13. Accumulated Other Comprehensive (Loss) Income 14. Retirement and Other Employee Benefits 15. Share-Based Compensation 16. Commitments and Contingencies 17. Litigation 18. Derivative Financial Instruments 19. Fair Value Measurements 20. Related Party Transactions 21. Unaudited Quarterly Financial Information 22. Business Segment Data 23. Shareholders' Equity Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 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] Item 9A. Controls and Procedures 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] - No material changes in internal control over financial reporting occurred during the year ended December 28, 2018[822] - 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] Item 9B. Other Information The company reported no other information for this item - There is no other information to report for this item[824] 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 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] - 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] Item 11. Executive Compensation 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] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 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] Item 13. Certain Relationships and Related Transactions, and Director Independence 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] Item 14. Principal Accountant Fees and Services 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] PART IV This section details exhibits and financial statement schedules, including various agreements, organizational documents, and certifications Item 15. Exhibits and Financial Statement Schedules 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] - 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][837][838][842][845][846][847][848][851][853][855][857] - Certifications from the Chief Executive Officer and Chief Financial Officer are included, along with XBRL formatted documents[861][862][863][864][865][866] Item 16. Form 10-K Summary This item is not applicable to the report - Item 16. Form 10-K Summary is not applicable[868]