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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 March 29, 2024
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             

333-07708
(Commission file number)
———————————
FRESH DEL MONTE PRODUCE INC.
(Exact Name of Registrant as Specified in Its Charter)
 ———————————
Cayman IslandsN/A
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S Employer
Identification No.)
c/o H&C Corporate Services Limited
P.O. Box 698, 4th Floor, Apollo House, 87 Mary Street
George Town,Grand Cayman,KY1-1107
Cayman IslandsN/A
(Address of Registrant’s Principal Executive Office)(Zip Code)

(305) 520-8400
(Registrant’s telephone number including area code)
Please send copies of notices and communications from the Securities and Exchange Commission to:
c/o Del Monte Fresh Produce Company
241 Sevilla Avenue
Coral Gables, Florida 33134
(Address of Registrant’s U.S. Executive Office)

 ——————————— 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Ordinary Shares, $0.01 Par Value Per ShareFDPNew York Stock Exchange


Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of April 26, 2024, there were 47,898,240 ordinary shares of Fresh Del Monte Produce Inc. issued and outstanding.







TABLE OF CONTENTS
Page
PART I: FINANCIAL INFORMATION
 
 
PART II. OTHER INFORMATION


PART I: FINANCIAL INFORMATION

Item 1.        Financial Statements

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS (Unaudited)
(U.S. dollars in millions, except share and per share data)
March 29,
2024
December 29,
2023
Assets  
Current assets:  
Cash and cash equivalents$42.2 $33.8 
Trade accounts receivable, net of allowance of
$23.2 and $20.8, respectively
435.0 387.0 
Other accounts receivable, net of allowance of
$5.8 and $5.6, respectively
94.2 95.1 
Inventories, net575.1 599.9 
Assets held for sale11.7 4.5 
Prepaid expenses and other current assets22.3 24.0 
Total current assets1,180.5 1,144.3 
Investments in and advances to unconsolidated companies26.2 22.2 
Property, plant and equipment, net1,234.8 1,256.4 
Operating lease right-of-use assets201.3 213.8 
Goodwill401.8 401.9 
Intangible assets, net33.2 33.3 
Deferred income taxes53.5 51.5 
Other noncurrent assets68.7 60.7 
Total assets$3,200.0 $3,184.1 
Liabilities and shareholders' equity  
Current liabilities:  
Accounts payable and accrued expenses$484.7 $479.0 
Current maturities of debt and finance leases1.4 1.4 
Current maturities of operating leases44.9 48.6 
Income taxes and other taxes payable15.2 11.6 
Total current liabilities546.2 540.6 
Long-term debt and finance leases405.8 406.1 
Retirement benefits83.8 82.3 
Deferred income taxes76.2 72.7 
Operating leases, less current maturities133.9 142.1 
Other noncurrent liabilities26.0 27.6 
Total liabilities1,271.9 1,271.4 
Commitments and contingencies (See note 9)
Redeemable noncontrolling interest  
Shareholders' equity:  
Preferred shares, $0.01 par value; 50,000,000 shares
authorized; none issued or outstanding
  
Ordinary shares, $0.01 par value; 200,000,000 shares authorized;
47,896,132
and 47,629,018 issued and outstanding, respectively
0.5 0.5 
Paid-in capital598.7 597.7 
Retained earnings1,355.2 1,341.4 
Accumulated other comprehensive loss(42.7)(43.3)
Total Fresh Del Monte Produce Inc. shareholders' equity1,911.7 1,896.3 
Noncontrolling interests16.4 16.4 
Total shareholders' equity1,928.1 1,912.7 
Total liabilities, redeemable noncontrolling interest and shareholders' equity
$3,200.0 $3,184.1 
See accompanying notes.
1


FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(U.S. dollars in millions, except share and per share data)
 Quarter ended
March 29,
2024
March 31,
2023
Net sales$1,107.9 $1,128.5 
Cost of products sold1,025.6 1,031.5 
Gross profit82.3 97.0 
Selling, general and administrative expenses50.7 47.6 
Gain on disposal of property, plant and equipment, net14.8 27.5 
Asset impairment and other charges, net2.3 2.4 
Operating income44.1 74.5 
Interest expense5.2 8.0 
Interest income0.2 0.1 
Other expense, net7.7 9.3 
Income before income taxes31.4 57.3 
Income tax provision5.3 9.5 
Net income$26.1 $47.8 
Less: Net income attributable to redeemable and noncontrolling interests 8.8 
    Net income attributable to Fresh Del Monte Produce Inc. $26.1 $39.0 
    Net income per ordinary share attributable to Fresh Del Monte Produce Inc. - Basic$0.55 $0.81 
    Net income per ordinary share attributable to Fresh Del Monte Produce Inc. - Diluted$0.55 $0.81 
Dividends declared per ordinary share$0.25 $0.15 
Weighted average number of ordinary shares:
Basic 47,709,355 47,892,934 
Diluted 47,903,920 48,153,540 

See accompanying notes.
2

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(U.S. dollars in millions)
Quarter ended
March 29,
2024
March 31,
2023
Net income$26.1 $47.8 
Other comprehensive income:
Net unrealized gain on derivatives, net of tax5.8  
Net unrealized foreign currency translation (loss) gain(4.6)2.0 
Net change in retirement benefit adjustment, net of tax(0.6)(0.4)
Comprehensive income$26.7 $49.4 
Less: Comprehensive income attributable to redeemable and noncontrolling interests 8.8 
Comprehensive income attributable to Fresh Del Monte Produce Inc.$26.7 $40.6 
    

See accompanying notes.

3


FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(U.S. dollars in millions)
 Quarter ended
March 29,
2024
March 31,
2023
Operating activities:  
Net income$26.1 $47.8 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization20.0 22.1 
Amortization of debt issuance costs0.2 0.1 
Share-based compensation expense0.6 2.3 
Change in uncertain tax positions(0.2)0.3 
Gain on disposal of property, plant and equipment(14.8)(27.5)
Deferred income taxes1.5 (3.9)
Other, net2.3 1.6 
Changes in operating assets and liabilities
  
Receivables(52.9)(50.6)
Inventories23.3 17.4 
Prepaid expenses and other current assets1.7 (2.3)
Accounts payable and accrued expenses13.9 1.0 
Other assets and liabilities(3.0)7.2 
Net cash provided by operating activities18.7 15.5 
Investing activities:  
Capital expenditures(12.7)(10.0)
Proceeds from sales of property, plant and equipment20.1 90.7 
Investments in and advances to unconsolidated companies(3.5)(1.1)
Net cash provided by investing activities3.9 79.6 
Financing activities:  
Proceeds from debt79.3 143.4 
Payments on debt(79.3)(210.5)
     Distributions to noncontrolling interests (0.3)
Share-based awards settled in cash for taxes(0.8)(0.5)
Dividends paid(11.9)(7.2)
Payment of deferred financing costs(2.1) 
Other financing activities(1.2)(0.8)
Net cash used in financing activities(16.0)(75.9)
Effect of exchange rate changes on cash1.8 (0.7)
Net increase in cash and cash equivalents8.4 18.5 
Cash and cash equivalents, beginning33.8 17.2 
Cash and cash equivalents, ending$42.2 $35.7 
Supplemental cash flow information:  
Cash paid for interest$5.4 $7.3 
Cash paid for income taxes$3.8 $4.1 
Non-cash financing and investing activities:  
Right-of-use assets obtained in exchange for new operating lease obligations$1.9 $19.3 
Dividends on restricted stock units$0.4 $0.3 
Non-cash conversion of note receivable in exchange for investment in unconsolidated company$0.7 $ 


See accompanying notes.
4


FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST
(Unaudited) (U.S. dollars in millions, except share data)

 Ordinary Shares OutstandingOrdinary SharesPaid-in CapitalRetained EarningsAccumulated Other Comprehensive LossFresh Del Monte Produce Inc.
 Shareholders' Equity
Noncontrolling InterestsTotal Shareholders' EquityRedeemable Noncontrolling Interest
Balance as of December 29, 202347,629,018 $0.5 $597.7 $1,341.4 $(43.3)$1,896.3 $16.4 $1,912.7 $ 
Settlement of restricted stock units267,114 — — — — — — — — 
Share-based payment expense— — 0.6 — — 0.6 — 0.6 — 
Dividend declared— — 0.4 (12.3)— (11.9)— (11.9)— 
Comprehensive income:
Net income — — — 26.1 — 26.1  26.1  
Unrealized gain on derivatives, net of tax— — — — 5.8 5.8 — 5.8 — 
Net unrealized foreign currency translation loss— — — — (4.6)(4.6)— (4.6)— 
Change in retirement benefit adjustment, net of tax— — — — (0.6)(0.6)— (0.6)— 
Comprehensive income     26.7  26.7  
Balance as of March 29, 202447,896,132 $0.5 $598.7 $1,355.2 $(42.7)$1,911.7 $16.4 $1,928.1 $ 

 Ordinary Shares OutstandingOrdinary SharesPaid-in CapitalRetained EarningsAccumulated Other Comprehensive LossFresh Del Monte Produce Inc.
Shareholders' Equity
Noncontrolling InterestsTotal Shareholders' EquityRedeemable Noncontrolling Interest
Balance as of December 30, 202247,838,680 $0.5 $548.1 $1,397.6 $(41.5)$1,904.7 $20.9 $1,925.6 $49.4 
Exercises of stock options2,418 — — — 
Settlement of restricted stock units157,648 — — — — — — — — 
Share-based payment expense— — 2.3 — — 2.3 — 2.3 — 
Distribution to noncontrolling interests— — — — — —   (0.3)
Dividend declared— — 0.3 (7.5)— (7.2)— (7.2)— 
Comprehensive income:
Net income— — — 39.0 — 39.0 8.5 47.5 0.3 
Unrealized gain on derivatives, net of tax— — — —   —  — 
Net unrealized foreign currency translation gain— — — — 2.0 2.0 — 2.0 — 
Change in retirement benefit adjustment, net of tax— — — — (0.4)(0.4)— (0.4)— 
Comprehensive income    40.6 8.5 49.1 0.3 
Balance as of March 31, 202347,998,746 $0.5 $550.7 $1,429.1 $(39.9)$1,940.4 $29.4 $1,969.8 $49.4 
See accompanying notes.

5

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


1.  General
 
Reference in this Report to “Fresh Del Monte”, “we”, “our” and “us” and the “Company” refer to Fresh Del Monte Produce Inc. and its subsidiaries, unless the context indicates otherwise.

Nature of Business
 
We were incorporated under the laws of the Cayman Islands in 1996. We are one of the world’s leading vertically integrated producers, marketers and distributors of high-quality fresh and fresh-cut fruit and vegetables, as well as a leading producer and marketer of prepared fruit and vegetables, juices, beverages and snacks in Europe, Africa and the Middle East. We market our products worldwide under the Del Monte® brand, a symbol of product innovation, quality, freshness and reliability since 1892. Our major sales markets are organized as follows: North America, Europe, the Middle East (which includes North Africa) and Asia. Our global sourcing and logistics system allows us to provide regular delivery of consistently high-quality produce and value-added services to our customers. Our major production operations are located in North, Central and South America, Asia and Africa. Our products are sourced from company-owned operations and through supply contracts with independent growers.

Our business is comprised of three reportable segments, two of which represent our primary businesses of fresh and value-added products and banana, and one that represents our other ancillary businesses.

Fresh and value-added products - includes pineapples, fresh-cut fruit, fresh-cut vegetables (which includes fresh-cut salads), melons, vegetables, non-tropical fruit (including grapes, apples, citrus, blueberries, strawberries, pears, peaches, plums, nectarines, cherries and kiwis), other fruit and vegetables, avocados, and prepared foods (including prepared fruit and vegetables, juices, other beverages, and meals and snacks).

Banana

Other products and services - includes our third-party freight and logistic services business and our Jordanian poultry and meats business.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements for the quarter ended March 29, 2024 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature considered necessary for fair presentation have been included. Operating results for the quarter ended March 29, 2024 are subject to significant seasonal variations and are not necessarily indicative of the results that may be expected for the year ending December 27, 2024. For further information, refer to the Consolidated Financial Statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended December 29, 2023.

We are required to evaluate events occurring after March 29, 2024 for recognition and disclosure in the unaudited Consolidated Financial Statements for the quarter ended March 29, 2024. Events are evaluated based on whether they represent information existing as of March 29, 2024, which require recognition in the unaudited Consolidated Financial Statements, or new events occurring after March 29, 2024 which do not require recognition but require disclosure if the event is significant to the unaudited Consolidated Financial Statements. We evaluated events occurring subsequent to March 29, 2024 through the date of issuance of these unaudited Consolidated Financial Statements.


6

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

Redeemable Noncontrolling Interest

As part of the Mann Packing acquisition in 2018, we acquired a put option exercisable by the 25% shareholder of one of the acquired subsidiaries. The put option allowed the noncontrolling shareholder to sell its 25% noncontrolling interest to us for a multiple of the subsidiary's adjusted earnings. As the put option was outside of our control, the carrying value of the 25% noncontrolling interest was presented as a redeemable noncontrolling interest outside of permanent equity on our Consolidated Balance Sheet. At each reporting period, the redeemable noncontrolling interest was recognized at the higher of (1) the initial carrying amount adjusted for accumulated earnings and distributions or (2) the contractually-defined redemption value as of the balance sheet date.

During the year ended December 29, 2023, the noncontrolling shareholder exercised its put option right and accordingly, we closed the purchase of the remaining 25% of this subsidiary for $5.2 million in cash consideration. The transaction was accounted for as an equity transaction, with the differential between the redeemable noncontrolling interest carrying amount at the time of closing and the cash purchase price being recognized as a $42.7 million increase in paid-in capital within shareholders' equity on our Consolidated Balance Sheet.

2. Recently Issued Accounting Pronouncements

New Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU amends Accounting Standards Codification (ASC) 280 to enhance the nature and frequency of segment disclosures. Specifically, the update requires disclosure of significant segment expenses regularly provided to the Chief Operating Decision Maker ("CODM") included within the reported measures of a segment's profit or loss, the amount and composition of other segment items in order to reconcile to the reported measures of a segment's profit or loss, the CODM's title and position, and how the CODM uses the reported measures of a segment's profit or loss in assessing segment performance and how to allocate resources. The ASU also makes requires that annual disclosures about a reportable segment's profit or loss and assets required by Topic 280 be made in interim periods. ASU 2023-07 is effective for years beginning after December 15, 2023 and interim periods beginning after December 15, 2024 with early adoption permitted. We have evaluated the impact of the adoption of this ASU and concluded it has no impact on our financial condition, results of operations and cash flows.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. This ASU amends ASC 740 to enhance the nature of disclosures for income taxes. Specifically, the ASU requires public business entities to disclose additional information in categories defined within the ASU within the reconciliation of the effective tax rate to the statutory rate for federal, state and foreign income taxes. Additionally, the ASU requires disclosure of taxes paid, net of refunds received, disaggregated by federal, state and foreign taxes. ASU 2023-09 is effective for years beginning after December 15, 2024 with early adoption permitted. We have evaluated the impact of the adoption of this ASU and concluded it has no impact on our financial condition, results of operations and cash flows.

7

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

3.  Asset Impairment and Other Charges, Net

The following represents a summary of asset impairment and other charges, net recorded during the quarters ended March 29, 2024 and March 31, 2023 (U.S. dollars in millions):
Quarter endedQuarter ended
March 29, 2024March 31, 2023
 Long-lived and other
asset impairment
 Exit activity and other
 charges
TotalLong-lived and other
asset impairment
 Exit activity and other
 charges
Total
Banana segment:      
California Air Resource Board reserve (1)
$— $0.5 $0.5 $— $— $— 
Other:
Legal settlement (2)
 1.8 1.8 — — — 
2023 cybersecurity incident expenses (3)
    2.4 2.4 
Total asset impairment and other charges, net$ $2.3 $2.3 $ $2.4 $2.4 

(1) During the three months ended March 29, 2024, we recorded a $0.5 million reserve relating to a potential liability arising from our third-party logistics operation. Refer to Note 9, “Commitments and Contingencies.

(2) Subsequent to March 29, 2024, we entered into a settlement agreement with respect to a litigation matter by a former employee. This matter was in the discovery phase until the first quarter of 2024, when the court set the expected trial date and the parties began to discuss settlement. Accordingly, we accrued $1.8 million, net of insurance reimbursements, associated with the settlement as of March 29, 2024.

(3) During the three months ended March 31, 2023, we incurred cybersecurity expenses of $2.4 million, primarily related to the engagement of specialized legal counsel and other incident response advisors.

4. Income Taxes

In connection with the examination of the tax returns in two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $174.1 million (including interest and penalties) for tax years 2012 through 2016. We strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities.

In one of the foreign jurisdictions, we are currently contesting tax assessments related to the 2012-2015 audit years and the 2016 audit year in both the administrative court and the judicial court. During 2019 and 2020, we filed actions contesting the tax assessment in the administrative office. Our initial challenge to each of these tax assessments was rejected, and we subsequently lost our appeals at the administrative court. We have subsequently filed actions to contest each of these tax assessments in the country’s judicial courts. In addition, we have filed a request for injunction to the judicial court to stay the tax authorities' collection efforts for these two tax assessments, pending final judicial decisions. The court granted our injunction with respect to the 2016 audit year, however denied our injunction with respect to the 2012-2015 audit years. We timely appealed the denial of the injunction, and on August 10, 2022 the appellate court overturned the denial and granted our injunction for the 2012-2015 audit years. Pursuant to local law, we registered real estate collateral with an approximate fair market value of $7.3 million in connection with the grant of the 2016 audit year injunction. This real estate collateral has a net book value of $3.8 million as of the quarter ended March 29, 2024. In addition, in connection with the grant of the 2012-2015 audit year injunction, we registered real estate collateral with an approximate fair market value of $30.3 million, and a net book value of $4.6 million as of the quarter ended March 29, 2024. The registration of this real estate collateral does not affect our operations in the country.

In the other foreign jurisdiction, the administrative court denied our appeal, and on March 4, 2020 we filed an action in the judicial court to contest the administrative court's decision. The case is still pending.
8

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

We will continue to vigorously contest the adjustments and intend to exhaust all administrative and judicial remedies necessary in both jurisdictions to resolve the matters, which could be a lengthy process.

Additionally, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (OECD) Pillar Two Framework. Pursuant to the implementation dates prescribed in the Directive, it is expected the rules will be effective for the Company for the 2025 fiscal year. A significant number of other countries are expected to also implement similar legislation with varying effective dates in the future. We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries, however, we may not be able to completely mitigate the impact of the legislation which could have an adverse material effect on our financial condition, results of operations and cash flows.

Income tax provision was $5.3 million for the quarter ended March 29, 2024 compared with $9.5 million for the quarter ended March 31, 2023. The decrease in the income tax provision was primarily due to decreased earnings in certain higher tax jurisdictions.

5.  Allowance for Credit Losses
 
We estimate expected credit losses on our trade receivables and financing receivables in accordance with Accounting Standards Codification (“ASC”) 326 - Financial Instruments - Credit Losses.

Trade Receivables

Trade receivables as of March 29, 2024 were $435.0 million, net of an allowance of $23.2 million. Our allowance for trade receivables consists of two components: a $8.0 million allowance for credit losses and a $15.2 million allowance for customer claims accounted for under the scope of ASC 606 - Revenue Recognition.

As a result of our robust credit monitoring practices, the industry in which we operate, and the nature of our customer base, the credit losses associated with our trade receivables have historically been insignificant in comparison to our annual net sales. We measure the allowance for credit losses on trade receivables on a collective (pool) basis when similar risk characteristics exist. We generally pool our trade receivables based on the geographic region or country to which the receivables relate. Receivables that do not share similar risk characteristics are evaluated for collectability on an individual basis.

Our historical credit loss experience provides the basis for our estimation of expected credit losses. We generally use a three-year average annual loss rate as a starting point for our estimation, and make adjustments to the historical loss rate to account for differences in current conditions impacting the collectability of our receivable pools. We generally monitor macroeconomic indicators to assess whether adjustments are necessary to reflect current conditions.

The table below presents a rollforward of our trade receivable allowance for credit losses for the quarters ended March 29, 2024 and March 31, 2023 (U.S. dollars in millions):
Quarter ended
Trade receivablesMarch 29,
2024
March 31,
2023
Allowance for credit losses:
Balance, beginning of period$7.4 $9.3 
Provision for uncollectible amounts0.7 0.5 
Deductions to allowance related to write-offs (0.2)
Foreign exchange effects(0.1) 
Balance, end of period
$8.0 $9.6 


9

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

Financing Receivables

Financing receivables are included in other accounts receivable, net on our Consolidated Balance Sheets and are recognized at amortized cost less an allowance for estimated credit losses. Financing receivables include seasonal advances to growers and suppliers, which are usually short-term in nature, and other financing receivables.

A significant portion of the fresh produce we sell is acquired through supply contracts with independent growers. In order to ensure the consistent high quality of our products and packaging, we make advances to independent growers and suppliers. These growers and suppliers typically sell all of their production to us and make payments on their advances as a deduction to the agreed upon selling price of the fruit or packaging material. The majority of the advances to growers and suppliers are for terms less than one year and typically span a growing season. In certain cases, there may be longer term advances with terms of up to five years.

We measure the allowance for credit losses on advances to suppliers and growers on a collective (pool) basis when similar risk characteristics exist. We generally pool our advances based on the country to which they relate, and further disaggregate them based on their current or past-due status. We generally consider an advance to a grower to be past due when the advance is not fully paid within the respective growing season. The allowance for advances to growers and suppliers that do not share similar risk characteristics are determined on a case-by-case basis, depending on the expected production for the season and other contributing factors. The advances are typically collateralized by property liens and pledges of the respective season’s produce. Occasionally, we agree to a payment plan with these growers or take steps to recover the advance via established collateral. We may write-off uncollectible financing receivables after our collection efforts are exhausted.

Our historical credit loss experience provides the basis for our estimation of expected credit losses. We generally use a three-year average annual loss rate as a starting point for our estimation, and make adjustments to the historical loss rate to account for differences in current or expected future conditions. We generally monitor macroeconomic indicators as well as other factors, including unfavorable weather conditions and crop diseases, which may impact the collectability of the advances when assessing whether adjustments to the historical loss rate are necessary.

The following table details the advances to growers and suppliers based on their credit risk profile (U.S. dollars in millions):
March 29, 2024December 29, 2023
 CurrentPast-DueCurrentPast-Due
Gross advances to growers and suppliers$20.8 $11.5 $25.1 $10.8 

The allowance for advances to growers and suppliers for the quarters ended March 29, 2024 and March 31, 2023 were as follows (U.S. dollars in millions):
Quarter ended
March 29,
2024
March 31,
2023
Allowance for advances to growers and suppliers:
Balance, beginning of period$7.5 $4.9 
Provision for uncollectible amounts1.1 2.8 
Balance, end of period$8.6 $7.7 

10

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

6.  Share-Based Compensation

We maintain various compensation plans for officers, other employees, and non-employee members of our Board of Directors. On June 2, 2022, our shareholders approved and ratified the 2022 Omnibus Share Incentive Plan (the “2022 Plan”). The 2022 Plan allows us to grant equity-based compensation awards including restricted stock units (“RSUs”), performance stock units (“PSUs”), stock options, and restricted stock awards. The 2022 Plan replaces and supersedes the 2014 Omnibus Share Incentive Plan (the “Prior Plan”). No awards can be granted under the Prior Plan upon adoption of the 2022 Plan. Under the 2022 Plan, the Board of Directors is authorized to award up to (i) 2,800,000 ordinary shares plus (ii) any ordinary shares remaining available for future awards under the Prior Plan at the time of adoption (of which there were approximately 241,263) plus (iii) any ordinary shares with respect to awards and Prior Plan awards that are forfeited, canceled, expire unexercised, or are settled in cash following adoption of the 2022 Plan.

Share-based compensation expense related to RSUs and PSUs is included in selling, general and administrative expenses in the accompanying Consolidated Statements of Operations and was comprised in the relevant period as follows (U.S. dollars in millions): 
 Quarter ended
March 29,
2024
March 31,
2023
RSUs/PSUs$0.6 $2.3 

Restricted Stock Units and Performance Stock Units

The following table lists the RSUs and PSUs awarded under the 2022 Plan during the quarters ended March 29, 2024 and March 31, 2023:

Date of AwardType of awardUnits awardedPrice per share
For the quarter ended March 29, 2024
March 1, 2024PSU285,460$24.37 
For the quarter ended March 31, 2023
March 2, 2023 (1)
PSU91,997$32.13 
March 2, 2023RSU215,627$32.13 

(1) The 2023 PSUs were forfeited during the quarter ended March 29, 2024 as a result of not meeting the performance metric.

Under the 2022 Plan and Prior Plan, each RSU/PSU represents a contingent right to receive one of our ordinary shares. The PSUs are subject to meeting minimum performance criteria set by the Compensation Committee of our Board of Directors. The actual number of shares the recipient receives is determined based on the results achieved versus performance goals. Those performance goals are based on exceeding a measure of our earnings. Depending on the results achieved, the actual number of shares that an award recipient receives at the end of the period may range from 0% to 100% of the award units granted, or as it relates to the 2024 and 2023 PSU awards granted to our Chairman and Chief Executive Officer, 0% to 125% of the award units granted. Provided such criteria are met, the PSUs granted during 2024, 2023 and prior to 2022 vest in three equal annual installments on each of the next three anniversary dates. PSUs granted during 2022 vest in three equal installments in 1) June and July 2023, 2) March 2024, and 3) March 2025. All PSU vesting is contingent on the recipient's continued employment with us.

Expense for RSUs is recognized on a straight-line basis over the requisite service period for the entire award. RSUs granted in 2023 and 2021 vest annually in three equal installments over a three-year service period while RSUs granted prior to 2021 vested 20% on the grant date, with 20% vesting on each of the next four anniversaries. RSUs granted in 2022 vest in three equal installments in June 2023, March 2024 and March 2025. RSUs granted to our Board of Directors generally vest after a one-year period.

11

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

The fair market value for RSUs and PSUs is based on the closing price of our stock on the grant date. We recognize expenses related to RSUs and PSUs based on the fair market value, as determined on the grant date, ratably over the vesting period, provided the performance condition, if any, is probable. Forfeitures are recognized as they occur.

RSUs and PSUs do not have the voting rights of ordinary shares, and the shares underlying the RSUs and PSUs are not considered issued and outstanding. However, shares underlying RSUs/PSUs are included in the calculation of diluted earnings per share to the extent the performance criteria are met, if any.

Each of our outstanding RSUs and PSUs are eligible to earn Dividend Equivalent Units (“DEUs”) equal to the cash dividend paid to ordinary shareholders. DEUs are subject to the same performance and/or service conditions as the underlying RSUs and PSUs and are forfeitable.

7.  Inventories, net
 
Inventories consisted of the following (U.S. dollars in millions):
 
March 29,
2024
December 29,
2023
Finished goods$203.8 $201.1 
Raw materials and packaging supplies162.0 167.1 
Growing crops209.3 231.7 
Total inventories, net$575.1 $599.9 

8.  Debt and Finance Lease Obligations
 
The following is a summary of long-term debt and finance lease obligations (U.S. dollars in millions):

 
March 29,
2024
December 29,
2023
Senior unsecured revolving credit facility (see Credit Facility below)$400.0 $400.0 
Finance lease obligations7.2 7.5 
Total debt and finance lease obligations407.2 407.5 
Less:  Current maturities(1.4)(1.4)
Long-term debt and finance lease obligations$405.8 $406.1 

Credit Facility

On October 1, 2019, we entered into a Second Amended and Restated Credit Agreement (as amended, the “Second A&R Credit Agreement”) with Bank of America, N.A. as administrative agent and BofA Securities, Inc. as sole lead arranger and sole bookrunner and certain other lenders. The Second A&R Credit Agreement provided for a five-year, $0.9 billion syndicated senior unsecured revolving credit facility maturing on October 1, 2024. The Second A&R Credit Agreement was subsequently amended on December 30, 2022, to replace the Eurocurrency Rate with the Term Secured Overnight Financing Rate ("Term SOFR" effective January 3, 2023.

On February 21, 2024, we entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement (the "2024 Amended Credit Facility") with Bank of America, N.A. as administrative agent and BofA Securities, Inc. as sole lead arranger and sole bookrunner and certain other lenders. The 2024 Amended Credit Facility provides for a five-year, $0.75 billion syndicated senior unsecured revolving credit facility maturing on February 21, 2029. Amounts borrowed under the revolving credit facility accrue interest at a rate equal to the Term SOFR rate plus a margin that ranges from 1.0% to 1.625% based on our Consolidated Leverage Ratio (as defined in the 2024 Amended Credit Facility). The 2024 Amended Credit Facility also permits, under certain conditions, $200 million of Permitted Receivables Financing (as defined in the 2024 Amended Credit Facility). In addition, we pay a fee on unused commitments at a rate equal to 0.150% to 0.250% based on our Consolidated Leverage Ratio.
12

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

The 2024 Amended Credit Facility provides for an accordion feature that permits us, without the consent of the other lenders, to request that one or more lenders provide us with increases in revolving credit facility or term loans up to an aggregate of $300 million (“Incremental Increases”). The aggregate amount of Incremental Increases can be further increased to the extent that after giving effect to the proposed increase in revolving credit facility commitments or term loans our Consolidated Leverage Ratio, on a pro forma basis, would not exceed 2.75 to 1.00. Our ability to request such increases or term loans is subject to our compliance with customary conditions set forth in the 2024 Amended Credit Facility including compliance, on a pro forma basis, with certain financial covenants and ratios. Upon our request, each lender may decide, in its sole discretion, whether to increase all or a portion of its revolving credit facility commitment or provide term loans.

The 2024 Amended Credit Facility contains similar financial covenants to those included within the Second A&R Credit Agreement. Specifically, it requires us to maintain 1) a Consolidated Leverage Ratio of not more than 3.75 to 1.00 at any time during any period of four consecutive fiscal quarters, subject to certain exceptions and 2) minimum Consolidated Interest Coverage Ratio of not less than 2.25 to 1.00 as of the end of any fiscal quarter. Additionally, it requires us to comply with certain other covenants, including limitations on capital investments, the amount of dividends that can be paid in the future, the amounts and types of liens and indebtedness, material asset sales, and mergers. Under the 2024 Amended Credit Facility, we are permitted to declare or pay cash dividends in any fiscal year up to an amount that does not exceed the greater of (i) an amount equal to (1) the greater of (A) 50% of the Consolidated Net Income (as defined in the 2024 Amended Credit Facility) for the immediately preceding fiscal year or (B) $25 million (the "Base Dividend Basket") plus (2) commencing in the fiscal year ending December 26, 2025 any portion of the Base Dividend Basket not used in the immediately preceding fiscal year, or (ii) the greatest amount which would not cause the Consolidated Leverage Ratio (determined on a pro forma basis as of the date of declaration or payment) to exceed 3.50 to 1.00. It also provides an allowance for stock repurchases to be an amount not exceeding the greater of (i) (A) $50,000,000 (the "Base Redemption Basket") plus (B) commencing in the fiscal year ending December 26, 2025, any portion of the Base Redemption Basket not used in the immediately preceding fiscal year or (ii) the greatest amount which would not cause the Consolidated Leverage Ratio (determined on a pro forma basis as of the date of such repurchase) to exceed 3.50 to 1.00. As of March 29, 2024, we were in compliance with all the covenants contained in the 2024 Amended Credit Facility.

In connection with the 2024 Amended Credit Facility, we paid lender and third-party fees of $2.1 million associated with the amendment. We concluded that the amendment resulted in a modification of debt and as such, determined that debt issuance costs incurred in connection with the 2024 Amended Credit Facility would be deferred and amortized over the term of the new arrangement. Debt issuance costs of $2.1 million and $0.1 million are included in other noncurrent assets on our Consolidated Balance Sheets as of March 29, 2024 and December 29, 2023, respectively.

The following is a summary of the material terms of the 2024 Amended Credit Facility and other working capital facilities at March 29, 2024 (U.S. dollars in millions):
 TermMaturity dateInterest rateBorrowing
limit
Available
borrowings, net of letters of credit and bank guarantees
Bank of America credit facility5 yearsFebruary 21, 20296.80%$750.0 $350.0 
Rabobank letter of credit facility364 daysJune 13, 2024Varies25.0 17.5 
Other working capital facilitiesVariesVariesVaries30.7 11.9 
$805.7 $379.4 

The margin for Term SOFR advances as of March 29, 2024 was 1.375%. We intend to use funds borrowed under the 2024 Amended Credit Facility from time to time for general corporate purposes, which may include working capital needs, capital expenditures, funding of possible acquisitions, share repurchases, and satisfaction of other obligations.

As of March 29, 2024, we applied $32.8 million to letters of credit and bank guarantees issued from Rabobank Nederland, Bank of America, and other banks.

During 2018, we entered into interest rate swaps in order to hedge the risk of the fluctuation on future interest payments related to our variable rate borrowings from our revolving credit facility. Refer to Note 13, “Derivative Financial Instruments.
13

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

9.  Commitments and Contingencies

Kunia Well Site
 
In 1980, elevated levels of certain chemicals were detected in the soil and ground-water at a plantation leased by one of our U.S. subsidiaries in Honolulu, Hawaii (the “Kunia Well Site”). In 2005, our subsidiary signed a Consent Decree (“Consent Decree”) with the Environmental Protection Agency (“EPA”) for the performance of the clean-up work for the Kunia Well Site. Based on findings from remedial investigations, our subsidiary coordinated with the EPA to evaluate the clean-up work required in accordance with the Consent Decree. On July 25, 2022, an Explanation of Significant Differences (ESD) for the Kunia Well Site was filed by the EPA, which formally transitioned the remedy for the Kunia Well Site to a Monitored Natural Attenuation (MNA), thereby reducing our potential liability.

The revised estimate associated with the clean-up costs, and on which our accrual is based, is $2.7 million. As of March 29, 2024, $2.4 million was included in other noncurrent liabilities, and $0.3 million was included in accounts payable and accrued expenses in the Consolidated Balance Sheets for the Kunia Well Site clean-up. We expect to expend approximately $0.3 million in 2024, $0.6 million in 2025, $0.5 million in 2026, $0.4 million in 2027, and $0.4 million in 2028.

California Air Resource Board

On December 21, 2022, the California Air Resource Board ("CARB") issued a Notice of Violation ("NOV") to the Company regarding violations of certain California anti-air pollution regulations by three non-shore capable vessels that were subject to a time charter by us from an unrelated non-U.S. third party. We are cooperating with and assisted CARB in its audits for the alleged violations during 2021. While a formal proceeding by CARB has not been filed, we are discussing a settlement with CARB directly. During the three months ended March 29, 2024, we accrued expenses of $0.5 million as a contingent reserve which are included in asset impairments and other charges, net in the Consolidated Statements of Operations. This amount is in addition to a $0.4 million contingent reserve accrued as of December 29, 2023 related to this matter.

Legal Settlement

Subsequent to March 29, 2024, we entered into a settlement agreement with respect to a litigation matter by a former employee regarding a legacy claim stemming from the 1970s. This matter was in the discovery phase until the first quarter of 2024, when the court set the expected trial date and the parties began to discuss settlement. Accordingly, we have accrued $1.8 million, net of insurance reimbursements, associated with the settlement, which is included in assets impairment and other charges, net in the Consolidated Statements of Operations for the three months ended March 29, 2024.

Additional Information
 
In addition to the foregoing, we are involved from time to time in various claims and legal actions incident to our operations, both as plaintiff and defendant. In the opinion of management, after consulting with legal counsel, none of these other claims are currently expected to have a material adverse effect on the results of operations, financial position or our cash flows.

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FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

10.  Earnings Per Share
 
Basic and diluted net income per ordinary share is calculated as follows (U.S. dollars in millions, except share and per share data):
 Quarter ended
March 29,
2024
March 31,
2023
Numerator:
Net income attributable to Fresh Del Monte
Produce Inc.
$26.1 $39.0 
Denominator:
Weighted average number of ordinary shares -
Basic
47,709,355 47,892,934 
Effect of dilutive securities - share-based
awards
194,565 260,606 
Weighted average number of ordinary shares -
Diluted
47,903,920 48,153,540 
Antidilutive awards (1)
64,400 69,790 
Net income per ordinary share attributable to Fresh Del Monte Produce Inc.:
 
Basic$0.55 $0.81 
Diluted$0.55 $0.81 

(1)Certain unvested RSUs and PSUs are not included in the calculation of net income per ordinary share because the effect would have been antidilutive.

11.  Retirement and Other Employee Benefits
 
The following table sets forth the net periodic benefit costs of our defined benefit pension plans and post-retirement benefit plans (U.S. dollars in millions):
 Quarter ended
March 29,
2024
March 31,
2023
Service cost$1.8 $1.4 
Interest cost2.1 1.8 
Expected return on assets(0.9)(0.8)
Amortization of net actuarial loss0.5 0.2 
Net periodic benefit costs$3.5 $2.6 
 
We provide certain other retirement benefits to certain employees who are not U.S.-based and are not included above. Generally, benefits under these programs are based on an employee’s length of service and level of compensation. These programs are immaterial to our consolidated financial statements. The net periodic benefit costs related to other non-U.S. based plans is $0.7 million for the quarter ended March 29, 2024 and $0.5 million for the quarter ended March 31, 2023.

Service costs are presented in the same line item in the Consolidated Statements of Operations as other compensation costs arising from services rendered by the employees during the period. With the exception of service cost, the other components of net periodic benefit costs (which include interest costs, expected return on assets, curtailment and settlement expenses, and amortization of net actuarial losses) are recorded in the Consolidated Statements of Operations in other expense, net.

15

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

12.  Business Segment Data
 
Our business is comprised of three reportable segments, two of which represent our primary businesses of fresh and value-added products and banana, and one that represents our other ancillary businesses.

Fresh and value-added products - includes pineapples, fresh-cut fruit, fresh-cut vegetables (which includes fresh-cut salads), melons, vegetables, non-tropical fruit (including grapes, apples, citrus, blueberries, strawberries, pears, peaches, plums, nectarines, cherries and kiwis), other fruit and vegetables, avocados, and prepared foods (including prepared fruit and vegetables, juices, other beverages, and meals and snacks).

Banana

Other products and services - includes our third-party freight and logistic services business and our Jordanian poultry and meats business.

We evaluate performance based on several factors, of which net sales and gross profit are the primary financial measures (U.S. dollars in millions): 

 Quarter ended
 March 29, 2024March 31, 2023
Segments:Net SalesGross ProfitNet SalesGross Profit
Fresh and value-added products$676.8 $55.9 $643.4 $47.1 
Banana379.5 21.8 425.1 43.2 
Other products and services51.6 4.6 60.0 6.7 
Totals$1,107.9 $82.3 $1,128.5 $97.0 

The following table indicates our net sales by geographic region (U.S. dollars in millions):

Quarter ended
Net sales by geographic region:March 29,
2024
March 31,
2023
North America$654.9 $667.2 
Europe209.4 216.6 
Asia106.7 112.0 
Middle East99.2 101.8 
Other37.7 30.9 
Totals$1,107.9 $1,128.5 
16

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

The following table indicates our net sales by product (U.S. dollars in millions) and, in each case, the percentage of the total represented thereby:

 Quarter ended
March 29,
2024
March 31,
2023
Fresh and value-added products:
Fresh-cut fruit$119.8 11 %$124.7 11 %
Fresh-cut vegetables81.4 7 %81.9 7 %
Pineapples163.6 15 %149.8 14 %
Avocados79.5 7 %64.7 6 %
Non-tropical fruit60.5 6 %61.3 5 %
Prepared foods69.5 6 %66.6 6 %
Melons53.2 5 %45.6 4 %
Tomatoes3.7  %5.4  %
Vegetables25.6 2 %26.5 2 %
Other fruit and vegetables20.0 2 %16.9 1 %
Total fresh and value-added products676.8 61 %643.4 56 %
Banana379.5 34 %425.1 38 %
Other products and services51.6 5 %60.0 6 %
Totals$1,107.9 100 %$1,128.5 100 %

13.  Derivative Financial Instruments

Our derivative financial instruments reduce our exposure to fluctuations in foreign exchange rates and variable interest rates. We designate our derivative financial instruments as cash flow hedges.
 
Counterparties expose us to credit loss in the event of non-performance of hedges. We monitor our exposure to counterparty non-performance risk both at inception of the hedge and at least quarterly thereafter.

Fluctuations in the value of the derivative instruments are generally offset by changes in the cash flows of the underlying exposures being hedged. A cash flow hedge requires that the change in the fair value of a derivative instrument be recognized in other comprehensive income, a component of shareholders’ equity, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item.

Certain of our derivative instruments contain provisions that require the current credit relationship between us and our counterparty to be maintained throughout the term of the derivative instruments. If that credit relationship changes, certain provisions could be triggered, and the counterparty could request immediate collateralization of derivative instruments in a net liability position above a certain threshold. The aggregate fair value of all derivative instruments with a credit-risk-related contingent feature that were in a liability position on March 29, 2024 was $0.1 million. As of March 29, 2024, no triggering event has occurred and thus we are not required to post collateral.

Derivative instruments are disclosed on a gross basis. There are various rights of setoff associated with our derivative instruments that are subject to an enforceable master netting arrangement or similar agreements. Although various rights of setoff and master netting arrangements or similar agreements may exist with the individual counterparties, individually, these financial rights are not material.

Cash flows from derivative instruments that are designated as cash flow hedges are classified in the same category as the cash flows from the underlying hedged items. In the event that hedge accounting is discontinued, cash flows related to changes in fair value subsequent to the date of discontinuance are classified within investing activities. 

17

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

Foreign Currency Hedges
 
Our results of operations and financial condition are exposed to fluctuations in currency exchange rates against the U.S. dollar, and we mitigate that exposure by entering into foreign currency forward contracts or foreign currency collars. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. Certain of our subsidiaries periodically enter into foreign currency forward contracts or foreign currency collars in order to hedge portions of forecasted sales or cost of sales denominated in foreign currencies, which generally mature within one year. At March 29, 2024, our foreign currency forward and collar contracts hedge a portion of our 2024 foreign currency exposure.
 
The foreign currency forward contracts and foreign currency collars qualifying as cash flow hedges were designated as single-purpose cash flow hedges of forecasted cash flows. 
 
We had the following outstanding foreign currency contracts as of March 29, 2024 (in millions):

Foreign currency contracts qualifying as cash flow hedges:Notional amount
EuroEUR50.8 
British poundGBP4.4 
Kenyan shillingKES2,098.4 

Interest Rate Contracts
 
Our results of operations and financial condition are exposed to fluctuations in variable interest rates, and we mitigate that exposure by entering into interest rate swaps. During 2018, we entered into interest rate swaps in order to hedge the risk of the fluctuation on future interest payments related to our variable rate LIBOR-based borrowings through 2028. We amended our Second A&R Credit Agreement and our interest rate swaps to transition from LIBOR to SOFR as a reference rate effective January 3, 2023.

Gains or losses on interest rate swaps are recorded in other comprehensive income and are subsequently reclassified into earnings as the interest expense on debt is recognized in earnings. At March 29, 2024, the notional value of interest rate contracts outstanding was $400.0 million, with $200.0 million maturing in June 2024 and the remaining $200.0 million maturing in 2028. Refer to Note 8, “Debt and Finance Lease Obligations.

The following table reflects the fair values of derivative instruments, which are designated as level 2 in the fair value hierarchy, as of March 29, 2024 and December 29, 2023 (U.S. dollars in millions):
 
Derivatives designated as hedging instruments (1)
Foreign exchange contractsInterest rate swapsTotal
Balance Sheet location:March 29,
2024
December 29,
2023
March 29,
2024
December 29,
2023
March 29,
2024
December 29,
2023
Asset derivatives:  
Prepaid expenses and other current assets$1.3 $0.1 $0.9 $2.1 $2.2 

$2.2 
Other noncurrent assets  9.0 5.8 9.0 5.8 
Total asset derivatives$1.3 $0.1 $9.9 $7.9 $11.2 $8.0 
Liability derivatives:  
Accounts payable and accrued expenses$0.1 $0.4 $ $ $0.1 

$0.4 
Total liability derivatives$0.1 $0.4 $ $ $0.1 $0.4 

(1) See Note 14, “Fair Value Measurements,” for fair value disclosures.


18

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

We expect that $5.2 million of the net fair value of our cash flow hedges recognized as a net gain in accumulated other comprehensive loss will be transferred to earnings during the next 12 months, and the remaining net gain of $4.9 million over the following 5 years, along with the earnings effect of the related forecasted transactions.

The following table reflects the effect of derivative instruments on the Consolidated Statements of Comprehensive Income for the quarters ended March 29, 2024 and March 31, 2023 (U.S. dollars in millions):
 
 
Net amount of gain (loss) recognized in other comprehensive income on derivatives
 Quarter ended
 
Derivative instruments
March 29,
2024
March 31,
2023
Foreign exchange contracts$3.7 $4.9 
Interest rate swaps, net of tax2.1 (4.9)
Total$5.8 $ 

Refer to Note 15, “Accumulated Other Comprehensive Loss,” for the effect of derivative instruments on the Consolidated Statements of Operations related to amounts reclassified from accumulated other comprehensive loss for the quarters ended March 29, 2024 and March 31, 2023.

14.  Fair Value Measurements
 
Fair Value of Derivative Instruments
 
Our derivative assets or liabilities include foreign exchange and interest rate derivatives that are measured at fair value using observable market inputs such as forward rates, interest rates, and our own credit risk as well as an evaluation of our counterparties' credit risks. We use an income approach to value our outstanding foreign currency and interest rate hedges, which consists of a discounted cash flow model that takes into account the present value of future cash flows under the terms of the contract using current market information as of the measurement date such as foreign currency spot rates, forward rates and interest rates. Additionally, we include an element of default risk based on observable inputs into the fair value calculation. Based on these inputs, the derivative assets or liabilities are classified within Level 2 of the valuation hierarchy.

The following table provides a summary of the fair values of our derivative financial instruments measured on a recurring basis (U.S. dollars in millions): 
Fair value measurements
 Foreign currency forward contracts, net asset (liability)Interest rate contracts, net asset
March 29,
2024
December 29,
2023
March 29,
2024
December 29,
2023
Quoted prices in active markets for identical assets (Level 1)$ $ $ $ 
Significant observable inputs (Level 2)1.2 (0.3)9.9 7.9 
Significant unobservable inputs (Level 3)    

In estimating our fair value disclosures for financial instruments, we use the following methods and assumptions:
 
Cash and cash equivalents: The carrying amount reported in the Consolidated Balance Sheets for these items approximates fair value due to their liquid nature and are classified as Level 1.
 
Trade accounts receivable and other accounts receivable, net: The carrying value reported in the Consolidated Balance Sheets for these items is net of allowances, which includes a degree of counterparty non-performance risk and are classified as Level 2.
 


19

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

Accounts payable and other current liabilities: The carrying value reported in the Consolidated Balance Sheets for these items approximates their fair value, which is the likely amount for which the liability with short settlement periods would be transferred to a market participant with a similar credit standing as ours and are classified as Level 2.

Long-term debt: The carrying value of our long-term debt reported in the Consolidated Balance Sheets approximates their fair value since they bear interest at variable rates which contain an element of default risk. The fair value of our long-term debt is estimated using Level 2 inputs based on quoted prices for those or similar instruments. Refer to Note 8, “Debt and Finance Lease Obligations.

Fair Value of Non-Financial Assets

The fair value of the banana reporting unit's goodwill and the prepared food reporting unit's goodwill and remaining trade names and trademarks are highly sensitive to differences between estimated and actual cash flows and changes in the related discount rate used to evaluate the fair value of these assets. We disclosed the sensitivity related to the banana reporting unit's goodwill and the prepared food reporting unit's goodwill and remaining trade names and trademarks in our notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2023. Our current estimates of future cash flows depend on our ability to demonstrate successful implementation of our strategies to improve sales and profitability from these activities over the upcoming quarters. If we are unable to demonstrate successful implementation of these strategies, it could lead to impairment of some or all of these assets.

Assets held for sale, which had a carrying amount of $11.7 million as of March 29, 2024, primarily consisted of $8.9 million related to a distribution facility in North America, $1.7 million related to an office and farm land in Central America and $0.8 million related to a warehouse in Europe. Assets held for sale are recognized at the lower of cost or fair value less cost to sell. The fair value measurements for our held for sale assets are generally based on Level 3 inputs, which include information obtained from third-party appraisals.

During the quarter ended March 29, 2024, we received proceeds of $17.8 million from the sale of assets previously held for sale and recorded a gain on disposal of property, plant and equipment, net of $14.7 million.

20

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

15.  Accumulated Other Comprehensive Loss

The following table includes the changes in accumulated other comprehensive loss by component (U.S. dollars in millions): 
Changes in Accumulated Other Comprehensive Loss by Component (1)
 Cash Flow HedgesForeign Currency Translation AdjustmentRetirement Benefit AdjustmentTotal
Quarter ended March 29, 2024
Balance at December 29, 2023$3.8 $(37.1)$(10.0)$(43.3)
Other comprehensive income (loss)
    before reclassifications
6.5 
(3)
(4.6)
(2)
(1.0)0.9 
Amounts reclassified from accumulated
    other comprehensive loss
(0.7)

 0.4 (0.3)
Net current period other comprehensive
    income (loss)
5.8 (4.6)(0.6)0.6 
Balance at March 29, 2024$9.6 $(41.7)$(10.6)$(42.7)
Quarter ended March 31, 2023
Balance at December 30, 2022$6.0 $(36.0)$(11.5)$(41.5)
Other comprehensive income (loss)
    before reclassifications
(0.4)
(3)
2.0 
(2)
(0.5)

1.1 
Amounts reclassified from accumulated
    other comprehensive loss
0.4  0.1 0.5 
Net current period other comprehensive
    income (loss)
 2.0 (0.4)1.6 
Balance at March 31, 2023$6.0 $(34.0)$(11.9)$(39.9)

(1) All amounts are net of tax and noncontrolling interest.
(2) Includes a loss of $2.8 million and a gain of $0.8 million for the quarter ended March 29, 2024 and quarter ended March 31, 2023, respectively, on intra-entity foreign currency transactions that are of a long-term-investment nature.
(3) Includes a tax effect of $0.1 million and $1.5 million for the quarter ended March 29, 2024 and quarter ended March 31, 2023, respectively.

21

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

The following table includes details about amounts reclassified from accumulated other comprehensive loss by component (U.S. dollars in millions): 
Amount of (gain) loss reclassified from accumulated other comprehensive loss
March 29, 2024March 31, 2023
Details about accumulated other comprehensive loss componentsQuarter endedQuarter endedAffected line item in the statement where net income is presented
Cash flow hedges:
Designated as hedging instruments:
Foreign currency cash flow hedges$(0.3)$(0.1)Net sales
Foreign currency cash flow hedges2.1 2.2 Cost of products sold
Interest rate swaps(2.6)