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 April 01, 2022March 31, 2023
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 22, 2022,21, 2023, there were 47,818,86147,999,922 ordinary shares of Fresh Del Monte Produce Inc. issued and outstanding.







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


Table of Contents
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)
April 1,
2022
December 31,
2021
March 31,
2023
December 30,
2022
AssetsAssets  Assets  
Current assets:Current assets:  Current assets:  
Cash and cash equivalentsCash and cash equivalents$25.3 $16.1 Cash and cash equivalents$35.7 $17.2 
Trade accounts receivable, net of allowance of
$24.3 and $21.8, respectively
415.8 342.9 
Other accounts receivable, net of allowance of
$3.3 and $3.8, respectively
105.1 94.4 
Trade accounts receivable, net of allowance of
$24.4 and $21.6, respectively
Trade accounts receivable, net of allowance of
$24.4 and $21.6, respectively
420.9 373.5 
Other accounts receivable, net of allowance of
$6.4 and $5.7, respectively
Other accounts receivable, net of allowance of
$6.4 and $5.7, respectively
94.3 91.0 
Inventories, netInventories, net620.5 602.8 Inventories, net646.9 669.0 
Assets held for saleAssets held for sale18.2 16.2 Assets held for sale21.9 67.3 
Prepaid expenses and other current assetsPrepaid expenses and other current assets33.1 24.0 Prepaid expenses and other current assets26.2 23.4 
Total current assetsTotal current assets1,218.0 1,096.4 Total current assets1,245.9 1,241.4 
Investments in and advances to unconsolidated companiesInvestments in and advances to unconsolidated companies15.8 8.7 Investments in and advances to unconsolidated companies18.9 18.0 
Property, plant and equipment, netProperty, plant and equipment, net1,396.9 1,415.8 Property, plant and equipment, net1,295.0 1,309.5 
Operating lease right-of-use assetsOperating lease right-of-use assets199.1 199.0 Operating lease right-of-use assets221.3 213.8 
GoodwillGoodwill423.4 423.7 Goodwill423.1 422.9 
Intangible assets, netIntangible assets, net140.9 142.8 Intangible assets, net133.4 135.0 
Deferred income taxesDeferred income taxes51.6 53.8 Deferred income taxes49.1 47.4 
Other noncurrent assetsOther noncurrent assets56.1 57.9 Other noncurrent assets56.4 70.9 
Total assetsTotal assets$3,501.8 $3,398.1 Total assets$3,443.1 $3,458.9 
Liabilities and shareholders' equityLiabilities and shareholders' equity  Liabilities and shareholders' equity  
Current liabilities:Current liabilities:  Current liabilities:  
Accounts payable and accrued expensesAccounts payable and accrued expenses$622.2 $580.1 Accounts payable and accrued expenses$537.7 $549.9 
Current maturities of debt and finance leasesCurrent maturities of debt and finance leases1.3 1.3 Current maturities of debt and finance leases1.4 1.3 
Current maturities of operating leasesCurrent maturities of operating leases36.8 37.0 Current maturities of operating leases43.9 41.6 
Income taxes and other taxes payableIncome taxes and other taxes payable16.0 10.8 Income taxes and other taxes payable17.9 14.2 
Current liabilities held for saleCurrent liabilities held for sale2.1 — 
Total current liabilitiesTotal current liabilities676.3 629.2 Total current liabilities603.0 607.0 
Long-term debt and finance leasesLong-term debt and finance leases562.3 527.7 Long-term debt and finance leases479.6 547.1 
Retirement benefitsRetirement benefits90.8 90.0 Retirement benefits85.5 82.4 
Deferred income taxesDeferred income taxes67.4 69.6 Deferred income taxes74.0 71.6 
Operating leases, less current maturitiesOperating leases, less current maturities137.6 136.0 Operating leases, less current maturities153.9 147.3 
Other noncurrent liabilitiesOther noncurrent liabilities44.1 72.1 Other noncurrent liabilities27.9 28.5 
Total liabilitiesTotal liabilities1,578.5 1,524.6 Total liabilities1,423.9 1,483.9 
Commitments and contingencies (See note 9)Commitments and contingencies (See note 9)00Commitments and contingencies (See note 9)
Redeemable noncontrolling interestRedeemable noncontrolling interest48.7 49.5 Redeemable noncontrolling interest49.4 49.4 
Shareholders' equity:Shareholders' equity:  Shareholders' equity:  
Preferred shares, $0.01 par value; 50,000,000 shares
authorized; none issued or outstanding
Preferred shares, $0.01 par value; 50,000,000 shares
authorized; none issued or outstanding
— — 
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;
47,817,843
and 47,554,695 issued and outstanding, respectively
0.5 0.5 
Ordinary shares, $0.01 par value; 200,000,000 shares authorized;
47,998,746
and 47,838,680 issued and outstanding, respectively
Ordinary shares, $0.01 par value; 200,000,000 shares authorized;
47,998,746
and 47,838,680 issued and outstanding, respectively
0.5 0.5 
Paid-in capitalPaid-in capital542.7 541.0 Paid-in capital550.7 548.1 
Retained earningsRetained earnings1,346.3 1,327.7 Retained earnings1,429.1 1,397.6 
Accumulated other comprehensive lossAccumulated other comprehensive loss(36.6)(66.9)Accumulated other comprehensive loss(39.9)(41.5)
Total Fresh Del Monte Produce Inc. shareholders' equityTotal Fresh Del Monte Produce Inc. shareholders' equity1,852.9 1,802.3 Total Fresh Del Monte Produce Inc. shareholders' equity1,940.4 1,904.7 
Noncontrolling interestsNoncontrolling interests21.7 21.7 Noncontrolling interests29.4 20.9 
Total shareholders' equityTotal shareholders' equity1,874.6 1,824.0 Total shareholders' equity1,969.8 1,925.6 
Total liabilities, redeemable noncontrolling interest and shareholders' equityTotal liabilities, redeemable noncontrolling interest and shareholders' equity$3,501.8 $3,398.1 Total liabilities, redeemable noncontrolling interest and shareholders' equity$3,443.1 $3,458.9 
See accompanying notes.
1

Table of Contents
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 Quarter ended
April 1,
2022
April 2,
2021
March 31,
2023
April 1,
2022
Net salesNet sales$1,136.9 $1,088.3 Net sales$1,128.5 $1,136.9 
Cost of products soldCost of products sold1,047.1 983.3 Cost of products sold1,031.5 1,047.1 
Gross profitGross profit89.8 105.0 Gross profit97.0 89.8 
Selling, general and administrative expensesSelling, general and administrative expenses45.2 48.9 Selling, general and administrative expenses47.6 45.2 
(Loss) gain on disposal of property, plant and equipment, net(3.8)2.7 
Asset impairment and other charges (credits), net1.0 (0.9)
Gain (loss) on disposal of property, plant and equipment, netGain (loss) on disposal of property, plant and equipment, net27.5 (3.8)
Asset impairment and other charges, netAsset impairment and other charges, net2.4 1.0 
Operating incomeOperating income39.8 59.7 Operating income74.5 39.8 
Interest expenseInterest expense5.3 5.4 Interest expense8.0 5.3 
Interest incomeInterest income— 0.2 Interest income0.1 — 
Other expense, netOther expense, net4.0 2.1 Other expense, net9.3 4.0 
Income before income taxesIncome before income taxes30.5 52.4 Income before income taxes57.3 30.5 
Income tax provisionIncome tax provision5.8 11.0 Income tax provision9.5 5.8 
Net incomeNet income$24.7 $41.4 Net income$47.8 $24.7 
Less: Net loss attributable to redeemable and noncontrolling interests(1.1)(1.3)
Less: Net income (loss) attributable to redeemable and noncontrolling interestsLess: Net income (loss) attributable to redeemable and noncontrolling interests8.8 (1.1)
Net income attributable to Fresh Del Monte Produce Inc. Net income attributable to Fresh Del Monte Produce Inc.$25.8 $42.7  Net income attributable to Fresh Del Monte Produce Inc.$39.0 $25.8 
Net income per ordinary share attributable to Fresh Del Monte Produce Inc. - Basic Net income per ordinary share attributable to Fresh Del Monte Produce Inc. - Basic$0.54 $0.90  Net income per ordinary share attributable to Fresh Del Monte Produce Inc. - Basic$0.81 $0.54 
Net income per ordinary share attributable to Fresh Del Monte Produce Inc. - Diluted Net income per ordinary share attributable to Fresh Del Monte Produce Inc. - Diluted$0.54 $0.90  Net income per ordinary share attributable to Fresh Del Monte Produce Inc. - Diluted$0.81 $0.54 
Dividends declared per ordinary shareDividends declared per ordinary share$0.15 $0.10 Dividends declared per ordinary share$0.15 $0.15 
Weighted average number of ordinary shares:Weighted average number of ordinary shares:  Weighted average number of ordinary shares:  
BasicBasic47,665,122 47,427,962 Basic47,892,934 47,665,122 
DilutedDiluted47,856,286 47,539,871 Diluted48,153,540 47,856,286 

See accompanying notes.
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Table of Contents
FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(U.S. dollars in millions)
Quarter endedQuarter ended
April 1,
2022
April 2,
2021
March 31,
2023
April 1,
2022
Net incomeNet income$24.7 $41.4 Net income$47.8 $24.7 
Other comprehensive income (loss):
Other comprehensive income:Other comprehensive income:
Net unrealized gain on derivatives, net of taxNet unrealized gain on derivatives, net of tax37.8 25.6 Net unrealized gain on derivatives, net of tax— 37.8 
Net unrealized foreign currency translation loss(7.4)(4.8)
Net unrealized foreign currency translation gain (loss)Net unrealized foreign currency translation gain (loss)2.0 (7.4)
Net change in retirement benefit adjustment, net of taxNet change in retirement benefit adjustment, net of tax(0.1)(0.6)Net change in retirement benefit adjustment, net of tax(0.4)(0.1)
Comprehensive incomeComprehensive income$55.0 $61.6 Comprehensive income$49.4 $55.0 
Less: Comprehensive loss attributable to redeemable and noncontrolling interests(1.1)(1.3)
Less: Comprehensive income (loss) attributable to redeemable and noncontrolling interestsLess: Comprehensive income (loss) attributable to redeemable and noncontrolling interests8.8 (1.1)
Comprehensive income attributable to Fresh Del Monte Produce Inc.Comprehensive income attributable to Fresh Del Monte Produce Inc.$56.1 $62.9 Comprehensive income attributable to Fresh Del Monte Produce Inc.$40.6 $56.1 
    

See accompanying notes.

3

Table of Contents
FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(U.S. dollars in millions)
 Quarter ended
April 1,
2022
April 2,
2021
Operating activities:  
Net income$24.7 $41.4 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:  
Depreciation and amortization23.6 23.8 
Amortization of debt issuance costs0.1 0.1 
Share-based compensation expense1.7 1.6 
Change in uncertain tax positions0.1 1.6 
Loss (gain) on disposal of property, plant and equipment3.8 (2.7)
Deferred income taxes(3.3)(0.5)
Foreign currency translation adjustment(5.3)0.3 
Other, net2.3 (0.8)
Changes in operating assets and liabilities  
Receivables(82.2)(69.6)
Inventories(19.2)(6.7)
Prepaid expenses and other current assets(0.5)3.8 
Accounts payable and accrued expenses53.5 57.5 
Other assets and liabilities0.4 (3.0)
Net cash (used in) provided by operating activities(0.3)46.8 
Investing activities:  
Capital expenditures(11.1)(33.6)
Proceeds from sales of property, plant and equipment1.6 2.9 
Cash received from settlement of derivatives not designated as hedges— 4.6 
Investments in unconsolidated companies(7.1)— 
Other investing activities— 0.2 
Net cash used in investing activities(16.6)(25.9)
Financing activities:  
Proceeds from debt262.5 185.7 
Payments on debt(227.5)(193.4)
     Distributions to noncontrolling interests— (0.9)
Share-based awards settled in cash for taxes(0.8)(0.3)
Dividends paid(7.2)(4.7)
Other financing activities(0.3)0.9 
Net cash provided by (used in) financing activities26.7 (12.7)
Effect of exchange rate changes on cash(0.6)1.7 
Net increase in cash and cash equivalents9.2 9.9 
Cash and cash equivalents, beginning16.1 16.5 
Cash and cash equivalents, ending$25.3 $26.4 
Supplemental cash flow information:  
Cash paid for interest$6.4 $6.7 
Cash paid for income taxes$2.5 $1.8 
Non-cash financing and investing activities:  
Right-of-use assets obtained in exchange for new operating lease obligations$10.8 $8.4 
Dividends on restricted stock units$— $0.2 

 Quarter ended
March 31,
2023
April 1,
2022
Operating activities:  
Net income$47.8 $24.7 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization22.1 23.6 
Amortization of debt issuance costs0.1 0.1 
Share-based compensation expense2.3 1.7 
Change in uncertain tax positions0.3 0.1 
(Gain) loss on disposal of property, plant and equipment(27.5)3.8 
Deferred income taxes(3.9)(3.3)
Other, net1.6 (3.0)
Changes in operating assets and liabilities  
Receivables(50.6)(82.2)
Inventories17.4 (19.2)
Prepaid expenses and other current assets(2.3)(0.5)
Accounts payable and accrued expenses1.0 53.5 
Other assets and liabilities7.2 0.4 
Net cash provided by (used in) operating activities15.5 (0.3)
Investing activities:  
Capital expenditures(10.0)(11.1)
Proceeds from sales of property, plant and equipment90.7 1.6 
Investments in unconsolidated companies(1.1)(7.1)
Net cash provided by (used in) investing activities79.6 (16.6)
Financing activities:  
Proceeds from debt143.4 262.5 
Payments on debt(210.5)(227.5)
     Distributions to noncontrolling interests(0.3)— 
Share-based awards settled in cash for taxes(0.5)(0.8)
Dividends paid(7.2)(7.2)
Other financing activities(0.8)(0.3)
Net cash (used in) provided by financing activities(75.9)26.7 
Effect of exchange rate changes on cash(0.7)(0.6)
Net increase in cash and cash equivalents18.5 9.2 
Cash and cash equivalents, beginning17.2 16.1 
Cash and cash equivalents, ending$35.7 $25.3 
Supplemental cash flow information:  
Cash paid for interest$7.3 $6.4 
Cash paid for income taxes$4.1 $2.5 
Non-cash financing and investing activities:  
Right-of-use assets obtained in exchange for new operating lease obligations$19.3 $10.8 
Dividends on restricted stock units$0.3 $— 
See accompanying notes.
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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' EquityNoncontrolling InterestsTotal Shareholders'
Equity
Redeemable Noncontrolling Interest Ordinary Shares OutstandingOrdinary SharesPaid-in CapitalRetained EarningsAccumulated Other Comprehensive LossFresh Del Monte Produce Inc. Shareholders' EquityNoncontrolling InterestsTotal Shareholders'
Equity
Redeemable Noncontrolling Interest
Balance as of December 31, 202147,554,695 $0.5 $541.0 $1,327.7 $(66.9)$1,802.3 $21.7 $1,824.0 $49.5 
Balance as of December 30, 2022Balance 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 optionsExercises of stock options2,418 — — — — — — — — 
Settlement of restricted stock unitsSettlement of restricted stock units263,148 — — — — — — — — Settlement of restricted stock units157,648 — — — — — — — — 
Share-based payment expenseShare-based payment expense— — 1.7 — — 1.7 — 1.7 — Share-based payment expense— — 2.3 — — 2.3 — 2.3 — 
Disposal of noncontrolling interest— — — — — — 0.3 0.3 — 
Distribution to noncontrolling interestsDistribution to noncontrolling interests— — — — — — — — (0.3)
Dividend declaredDividend declared— — — (7.2)— (7.2)— (7.2)— Dividend declared— — 0.3 (7.5)— (7.2)— (7.2)— 
Comprehensive income:Comprehensive income:Comprehensive income:
Net income (loss)— — — 25.8 — 25.8 (0.3)25.5 (0.8)
Net incomeNet income— — — 39.0 — 39.0 8.5 47.5 0.3 
Unrealized gain on derivatives, net of taxUnrealized gain on derivatives, net of tax— — — — 37.8 37.8 — 37.8 — Unrealized gain on derivatives, net of tax— — — — — — — — — 
Net unrealized foreign currency translation loss— — — — (7.4)(7.4)— (7.4)— 
Net unrealized foreign currency translation gainNet unrealized foreign currency translation gain— — — — 2.0 2.0 — 2.0 — 
Change in retirement benefit adjustment, net of taxChange in retirement benefit adjustment, net of tax— — — — (0.1)(0.1)— (0.1)— Change in retirement benefit adjustment, net of tax— — — — (0.4)(0.4)— (0.4)— 
Comprehensive income (loss)    56.1 (0.3)55.8 (0.8)
Balance as of April 1, 202247,817,843 $0.5 $542.7 $1,346.3 $(36.6)$1,852.9 $21.7 $1,874.6 $48.7 
Comprehensive incomeComprehensive income    40.6 8.5 49.1 0.3 
Balance as of March 31, 2023Balance 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 

Ordinary Shares OutstandingOrdinary SharesPaid-in CapitalRetained EarningsAccumulated Other Comprehensive LossFresh Del Monte Produce Inc. Shareholders' EquityNoncontrolling InterestsTotal Shareholders'
Equity
Redeemable Noncontrolling Interest Ordinary Shares OutstandingOrdinary SharesPaid-in CapitalRetained EarningsAccumulated Other Comprehensive LossFresh Del Monte Produce Inc. Shareholders' EquityNoncontrolling InterestsTotal Shareholders'
Equity
Redeemable Noncontrolling Interest
Balance as of January 1, 202147,372,419 $0.5 $533.1 $1,271.4 $(77.0)$1,728.0 $21.7 $1,749.7 $50.2 
Balance as of December 31, 2021Balance as of December 31, 202147,554,695 $0.5 $541.0 $1,327.7 $(66.9)$1,802.3 $21.7 $1,824.0 $49.5 
Settlement of restricted stock unitsSettlement of restricted stock units136,067 — — — — — — — — Settlement of restricted stock units263,148 — — — — — — — — 
Share-based payment expenseShare-based payment expense— — 1.6 — — 1.6 — 1.6 — Share-based payment expense— — 1.7 — — 1.7 — 1.7 — 
Disposal of noncontrolling interestDisposal of noncontrolling interest— — — — — — 0.3 0.3 — 
Dividend declaredDividend declared— — 0.2 (4.9)— (4.7)— (4.7)— Dividend declared— — — (7.2)— (7.2)— (7.2)— 
Comprehensive income:Comprehensive income:Comprehensive income:
Net income (loss)Net income (loss)— — — 42.7 — 42.7 (0.6)42.1 (0.7)Net income (loss)— — — 25.8 — 25.8 (0.3)25.5 (0.8)
Unrealized gain on derivatives, net of taxUnrealized gain on derivatives, net of tax— — — — 25.6 25.6 — 25.6 — Unrealized gain on derivatives, net of tax— — — — 37.8 37.8 — 37.8 — 
Net unrealized foreign currency translation lossNet unrealized foreign currency translation loss— — — — (4.8)(4.8)— (4.8)— Net unrealized foreign currency translation loss— — — — (7.4)(7.4)— (7.4)— 
Change in retirement benefit adjustment, net of taxChange in retirement benefit adjustment, net of tax— — — — (0.6)(0.6)— (0.6)— Change in retirement benefit adjustment, net of tax— — — — (0.1)(0.1)— (0.1)— 
Comprehensive income (loss)Comprehensive income (loss)    62.9 (0.6)62.3 (0.7)Comprehensive income (loss)    56.1 (0.3)55.8 (0.8)
Balance as of April 2, 202147,508,486 $0.5 $534.9 $1,309.2 $(56.8)$1,787.8 $21.1 $1,808.9 $49.5 
Balance at April 1, 2022Balance at April 1, 202247,817,843 $0.5 $542.7 $1,346.3 $(36.6)$1,852.9 $21.7 $1,874.6 $48.7 
See accompanying notes.

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Table of Contents
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, (which includes Kenya), 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 producing 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, and through joint venture arrangements.growers.

Our business is comprised of 3three 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 ancillary businesses consisting of sales ofthird-party freight and logistic services business and our Jordanian poultry and meat products, a plastic product business, and third-party freight services.meats business.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements for the quarter ended April 1, 2022March 31, 2023 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 April 1, 2022March 31, 2023 are subject to significant seasonal variations and are not necessarily indicative of the results that may be expected for the year ending December 30, 2022.29, 2023. 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 31, 2021.30, 2022.

We are required to evaluate events occurring after April 1, 2022March 31, 2023 for recognition and disclosure in the unaudited Consolidated Financial Statements for the quarter ended April 1, 2022.March 31, 2023. Events are evaluated based on whether they represent information existing as of April 1, 2022,March 31, 2023, which require recognition in the unaudited Consolidated Financial Statements, or new events occurring after April 1, 2022March 31, 2023 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 April 1, 2022March 31, 2023 through the date of issuance of these unaudited Consolidated Financial Statements.

Certain reclassification of prior period balances have been made to conform to current presentation. Refer to Note 12. Business Segment Data for further information.





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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

2. Recently Issued Accounting Pronouncements

New Accounting Pronouncements - Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and a subsequent amendmentamendments to the guidance, ASU 2021-01 in January 2021.2021 and ASU 2022-06 in December 2022. The ASU providesamendments in these updates provide optional guidance to companies to ease the potential burden associated with transitioning away from reference rates that are expected to be discontinued. The newrate reform. Specifically, the guidance provides optional expedients and exceptions to apply generally accepted accounting principles to contract modifications and hedging relationships, subject to certain criteria, that reference LIBOR or another reference rate expected to be discontinued. Companies can adoptAs of December 30, 2022, we had LIBOR-based borrowings and interest rate swaps that referenced LIBOR. Effective January 3, 2023, we amended our agreements and transitioned to the ASU immediately, howeverTerm Secured Overnight Financing Rate (Term SOFR) for these instruments. We adopted the optional guidance will only be available through December 31, 2022. While we are continuingin Topic 848 in conjunction with our contract amendments which allowed us to evaluate(i) account for the impactmodification to our debt agreement as a continuation of the existing contract and (ii) continue applying hedge accounting for our interest rate swaps. The adoption of this ASUguidance did not have a material impact on our consolidated financial condition, results of operations and cash flows, we do not expect its impact will be material at this time.statements.

3.  Asset Impairment and Other Charges, (Credits), Net

The following represents a summary of asset impairment and other charges, (credits), net recorded during the quarters ended March 31, 2023 and April 1, 2022 and April 2, 2021 (U.S. dollars in millions):
Quarter endedQuarter ended
April 1, 2022April 2, 2021
 Long-lived
and other
asset
impairment
 Exit activity and other
 (credits) charges
TotalLong-lived
and other
asset
impairment
Exit activity and other
 (credits) charges
Total
Banana segment:      
Insurance recovery related to hurricanes(1)
$— $— $— $— $(0.8)$(0.8)
Fresh and value-added products segment:   
Other fresh and value-added products segment charges (credits)— — — — (0.1)(0.1)
Other:
Former President/COO severance expense— 1.0 1.0 — — — 
Total asset impairment and
other charges (credits), net
$— $1.0 $1.0 $— $(0.9)$(0.9)
Quarter endedQuarter ended
March 31, 2023April 1, 2022
 Long-lived and other
asset impairment
 Exit activity and other
 charges
TotalLong-lived and other
asset impairment
 Exit activity and other
 charges
Total
Other (1):
2023 cybersecurity incident expenses (2)
— 2.4 2.4 — — — 
Former President/COO severance expense— — — — 1.0 1.0 
Total asset impairment and
other charges, net
$— $2.4 $2.4 $— $1.0 $1.0 

(1) Asset impairment and other charges, net for the quarters ended March 31, 2023 and April 1, 2022 were unrelated to any of our business segments. As such, they are classified as "other."
(2) $(0.8)2.4 million insurance recoverycharge for the quarter ended April 2, 2021March 31, 2023 associated with damagesa cybersecurity incident that resulted in costs primarily related to certainthe engagement of our banana fixed assets in Guatemala caused by hurricanes Etaspecialized legal counsel and Iota in the fourth quarter of 2020.other incident response advisors. The Company has cyber incident insurance, with a $1.0 million deductible, and has submitted these charges to its insurer for reimbursement.

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4. Income Taxes

In connection with the examination of the tax returns in 2two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $156.5$152.1 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 as we believe that the proposed adjustments are without technical merit.

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 authoritiesauthorities' collection efforts for these two tax assessments, pending final judicial decisions. The court has granted our injunction with respect to the 2016 audit year, and has not yet ruledhowever 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 $5.7$7.0 million in connection with the grant of the 2016 audit year injunction. This real estate collateral has a net book value of $4.1$3.8 million as of the quarter ended April 1, 2022. ToMarch 31, 2023. In addition, in connection with the extent that we are granted the injunction forgrant of the 2012-2015 audit years,year injunction, we currently anticipate that additionalregistered real estate collateral

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4. Income Taxes (continued)

$28.0 million, and a net book value of approximately $25.0$4.6 million would be required to be posted.as of the quarter ended March 31, 2023. 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.

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

Income tax provision was $9.5 million for the first quarter of 2023 when compared with $5.8 million for the first quarter of 2022 compared to $11.0 million for the first quarter of 2021.2022. The decreaseincrease in the income tax provision was primarily due to decreasedincreased 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 April 1, 2022March 31, 2023 were $415.8$420.9 million, net of an allowance of $24.3$24.4 million. Our allowance for trade receivables consists of two components: a $9.6 million allowance for credit losses and a $14.7$14.8 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 April 1, 2022 and April 2, 2021 (U.S. dollars in millions):
Quarter ended
Trade receivablesApril 1,
2022
April 2,
2021
Allowance for credit losses:
Balance, beginning of period$10.2 $15.1 
Provision for uncollectible amounts(0.3)0.1 
Deductions to allowance related to write-offs(0.3)— 
Balance, end of period$9.6 $15.2 







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5.  Allowance for Credit Losses (continued)

The table below presents a rollforward of our trade receivable allowance for credit losses for the quarters ended March 31, 2023 and April 1, 2022 (U.S. dollars in millions):
Quarter ended
Trade receivablesMarch 31,
2023
April 1,
2022
Allowance for credit losses:
Balance, beginning of period$9.3 $10.2 
Provision for uncollectible amounts0.5 (0.3)
Deductions to allowance related to write-offs(0.2)(0.3)
Balance, end of period$9.6 $9.6 


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. Historically, our credit losses associated with our advances to suppliers and growers have not been significant.

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):
April 1, 2022December 31, 2021
 CurrentPast-DueCurrentPast-Due
Gross advances to growers and suppliers$47.9 $2.8 $40.6 $5.5 
The allowance for advances to growers and suppliers for the quarters ended April 1, 2022 and April 2, 2021 were as follows (U.S. dollars in millions):
Quarter ended
April 1,
2022
April 2,
2021
Allowance for advances to growers and suppliers:
Balance, beginning of period$1.8 $2.1 
Provision for uncollectible amounts— — 
Balance, end of period$1.8 $2.1 









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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

5.  Allowance for Credit Losses (continued)

The following table details the advances to growers and suppliers based on their credit risk profile (U.S. dollars in millions):
March 31, 2023December 30, 2022
 CurrentPast-DueCurrentPast-Due
Gross advances to growers and suppliers$32.5 $9.6 $44.6 $5.6 

The allowance for advances to growers and suppliers for the quarters ended March 31, 2023 and April 1, 2022 were as follows (U.S. dollars in millions):
Quarter ended
March 31,
2023
April 1,
2022
Allowance for advances to growers and suppliers:
Balance, beginning of period$4.9 $1.8 
Provision for uncollectible amounts2.8 — 
Balance, end of period$7.7 $1.8 

6.  Share-Based Compensation

OurWe 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 20142022 Omnibus Share Incentive Plan (the “2014“2022 Plan”), which. The 2022 Plan allows us to grant equity-based compensation awards including stock options, restricted stock awardsunits (“RSUs”), performance stock units (“PSUs”), stock options, and restricted stock units including performance stock units. We disclosedawards. The 2022 Plan replaces and supersedes the significant terms2014 Omnibus Share Incentive Plan (the “Prior 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 220,000) 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 2014 Plan in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.2022 Plan.

Stock-based compensation expense related to restricted stock units (“RSUs”)RSUs and performance stock units (“PSUs”)PSUs is included in selling, general and administrative expenses in the accompanying Consolidated Statements of Operations and is comprised as follows (U.S. dollars in millions): 
 Quarter ended
April 1,
2022
April 2,
2021
RSUs/PSUs$1.7 $1.6 
Total$1.7 $1.6 
 Quarter ended
March 31,
2023
April 1,
2022
RSUs/PSUs$2.3 $1.7 

Restricted Stock Units and Performance Stock Units

The following table lists the RSUs and PSUs awarded under the 2022 Plan during the quarter ended March 31, 2023. There were no RSUs or PSUs awarded under the 2014 Plan forduring the quarter ended April 1, 2022.

The following table lists the various RSUs and PSUs awarded under the 2014 Plan for the quarter ended April 2, 2021:
Date of AwardType of awardUnits awardedPrice per share
For the quarter ended March 31, 2023
March 2, 2023PSU91,997$32.13 
March 2, 2023RSU215,62732.13 
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Date of AwardType of awardUnits awardedPrice per share
March 30, 2021RSU2,500$28.67 
March 1, 2021RSU290,02125.85 
March 1, 2021PSU118,19225.85 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

6.  Share-Based Compensation (continued)

Under the 20142022 Plan and Prior Plan, each RSU/PSU represents a contingent right to receive 1one 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 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 willgranted during 2023 and prior to 2022 vest in 3three equal annual installments on each of the next 3three anniversary dates provided thatdates. 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 remains employedrecipient'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 subsequent to January 1,in 2023 and 2021 will vest annually in 3three equal installments over a 3-yearthree-year service period.period while RSUs granted prior to January 1, 2021 vest as follows:vested 20% on the grant date, andwith 20% vesting on each of the next 4four 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.

The fair market value for RSUs and PSUs is based on the closing price of our stock on the grant date. We recognize expenseexpenses 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.

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7.  Inventories, net
 
Inventories consisted of the following (U.S. dollars in millions):
 
April 1,
2022
December 31,
2021
Finished goods$246.2 $197.9 
Raw materials and packaging supplies189.2 203.2 
Growing crops185.1 201.7 
Total inventories, net$620.5 $602.8 

March 31,
2023
December 30,
2022
Finished goods$251.7 $205.8 
Raw materials and packaging supplies178.0 233.2 
Growing crops217.2 230.0 
Total inventories, net$646.9 $669.0 

8.  Debt and Finance Lease Obligations
 
The following is a summary of long-term debt and finance lease obligations (U.S. dollars in millions):
 
April 1,
2022
December 31,
2021
March 31,
2023
December 30,
2022
Senior unsecured revolving credit facility (see Credit Facility below)Senior unsecured revolving credit facility (see Credit Facility below)$554.1 $519.1 Senior unsecured revolving credit facility (see Credit Facility below)$472.7 $539.8 
Finance lease obligationsFinance lease obligations9.5 9.9 Finance lease obligations8.3 8.6 
Total debt and finance lease obligationsTotal debt and finance lease obligations563.6 529.0 Total debt and finance lease obligations481.0 548.4 
Less: Current maturitiesLess: Current maturities(1.3)(1.3)Less: Current maturities(1.4)(1.3)
Long-term debt and finance lease obligationsLong-term debt and finance lease obligations$562.3 $527.7 Long-term debt and finance lease obligations$479.6 $547.1 

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8.  Debt and Finance Lease Obligations (continued)

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 provides for a five-year, $1.1$0.9 billion syndicated senior unsecured revolving credit facility (the “Revolving Credit Facility”) maturing on October 1, 2024 (the “Revolving Credit Facility”).2024. Certain of our direct and indirect subsidiaries have guaranteed the obligations under the Second A&R Credit Agreement. We intend to use funds borrowed under the Revolving Credit Facility from time to time for general corporate purposes, working capital, capital expenditures and other permitted investment opportunities.

AmountsOn December 30, 2022, we and certain of our subsidiaries executed Amendment No. 1 to the Second A&R Credit Agreement (the “Amendment”) with the financial institutions and other lenders named therein, including Bank of America, N.A. as administrative agent and BofA Securities, Inc. as sole lead arranger and sole bookrunner. Pursuant to the Amendment, the reference interest rate on the Revolving Credit Facility was amended to replace the Eurocurrency Rate with the Term Secured Overnight Financing Rate (“Term SOFR”) effective January 3, 2023. As amended, Term Loans made under the Revolving Credit Facility can be Base Rate Loans, Term SOFR Loans or Alternative Currency Term Rate Loans. All other material terms of the Second A&R Credit Agreement, as amended, remain unchanged.

Effective January 3, 2023, amounts borrowed under the Revolving Credit Facility accrue interest, at our election, at either (i) the EurocurrencyTerm SOFR Rate (as defined in the Second A&R Credit Agreement) plus a margin that ranges from 1.0% to 1.5% or (ii) the Base Rate (as defined in the Second A&R Credit Agreement) plus a margin that ranges from 0% to 0.5%, in each case based on our Consolidated Leverage Ratio (as defined in the Second A&R Credit Agreement). The Second A&R Credit Agreement interest rate grid provides for five pricing levels for interest rate margins.

The Second A&R Credit Agreement 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 2.50 to 1.00. Our ability to request such increases in the revolving credit facilityRevolving Credit Facility or term loans is subject to our compliance with customary conditions set forth in the Second A&R Credit Agreement including compliance, on a pro forma basis, with the financial covenants and ratios set forth therein. 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.






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8.  Debt and Finance Lease Obligations (continued)

The Second A&R Credit Agreement requires us to comply with certain financial and other covenants. Specifically, it requires us to maintain a 1) Consolidated Leverage Ratio of not more than 3.50 to 1.00 at any time during any period of four consecutive fiscal quarters, subject to certain exceptions and 2) a 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 expenditures, stock repurchases, the amount of dividends that can be paid in the future, the amount and types of liens and indebtedness, material asset sales, and mergers. Under the Second A&R Credit Agreement, 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 the greater of (A) 50% of the Consolidated Net Income (as defined in the Second A&R Credit Agreement) for the immediately preceding fiscal year or (B) $25 million or (ii) the greatest amount which would not cause the Consolidated Leverage Ratio (determined on a pro forma basis) to exceed 3.25 to 1.00. It also provides an allowance for stock repurchases to be an amount not exceeding the greater of (i) $150 million in the aggregate or (ii) the amount that, after giving pro forma effect thereto and any related borrowings, will not cause the Consolidated Leverage Ratio to exceed 3.25 to 1.00. As of April 1, 2022,March 31, 2023, we were in compliance with all of the covenants contained in the Second A&R Credit Agreement.

Debt issuance costs of $1.1$0.5 million and $1.3$0.6 million are included in other noncurrent assets on our Consolidated Balance Sheets as of April 1, 2022March 31, 2023 and December 31, 2021,30, 2022, respectively.

We also have a renewable 364-day, $25.0 million letter of credit facility with Rabobank Nederland.

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8.  Debt and Finance Lease Obligations (continued)

The following is a summary of the material terms of the Revolving Credit Facility and other working capital facilities at April 1, 2022March 31, 2023 (U.S. dollars in millions):
TermMaturity
date
Interest rateBorrowing
limit
Available
borrowings
TermMaturity
date
Interest rateBorrowing
limit
Available
borrowings
Bank of America credit facilityBank of America credit facility5 yearsOctober 1, 20241.83%$1,100.0 $545.9 Bank of America credit facility5 yearsOctober 1, 20246.03%$900.0 $427.3 
Rabobank letter of credit facilityRabobank letter of credit facility364 daysJune 15, 2022Varies25.0 16.0 Rabobank letter of credit facility364 daysJune 14, 2023Varies25.0 16.2 
Other working capital facilitiesOther working capital facilitiesVariesVariesVaries19.8 10.0 Other working capital facilitiesVariesVariesVaries27.7 18.0 
$1,144.8 $571.9 $952.7 $461.5 

The current margin for LIBORSOFR advances is 1.375%as of March 31, 2023 was 1.25%. We intend to use funds borrowed under the Revolving Credit Facility from time to time for general corporate purposes, working capital, capital expenditures and other permitted investment opportunities.

The Revolving Credit Facility permits borrowings under the revolving commitment with an interest rate determined based on our leverage ratio and spread over LIBOR.SOFR. In addition, we pay a fee on unused commitments.

As of April 1, 2022,March 31, 2023, we applied $28.2$28.0 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 LIBOR-based borrowings from our Revolving Credit Facility. Refer to Note 13, “Derivative Financial InstrumentsInstruments..

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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 1one 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 continues to evaluatecoordinated with the EPA to evaluate the clean-up work currently in progressrequired 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. In connection with the above decision, we recorded a $9.9 million reduction in our liability during the year ended December 30, 2022 to reflect the decrease in estimated costs associated with the clean-up.

The revised estimate associated with the clean-up costs, and on which our accrual is based, is $12.9$2.8 million. As of April 1, 2022, $12.5March 31, 2023, $2.5 million was included in other noncurrent liabilities, and $0.4$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 2023, $0.6 million in 2024, $0.5 million in 2025, $0.4 million in 2022, $1.12026, and $0.1 million in 2023 and $0.9 million in each of the years 2024, 2025 and 2026.2027.

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.

We intend to vigorously defend ourselves in all of the above matters.

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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 Quarter ended
April 1,
2022
April 2,
2021
March 31,
2023
April 1,
2022
Numerator:Numerator:  Numerator:  
Net income attributable to Fresh Del Monte
Produce Inc.
Net income attributable to Fresh Del Monte
Produce Inc.
$25.8 $42.7 
Net income attributable to Fresh Del Monte
Produce Inc.
$39.0 $25.8 
Denominator:Denominator:  Denominator:  
Weighted average number of ordinary shares -
Basic
Weighted average number of ordinary shares -
Basic
47,665,122 47,427,962 
Weighted average number of ordinary shares -
Basic
47,892,934 47,665,122 
Effect of dilutive securities - share-based
awards
Effect of dilutive securities - share-based
awards
191,164 111,909 
Effect of dilutive securities - share-based
awards
260,606 191,164 
Weighted average number of ordinary shares -
Diluted
Weighted average number of ordinary shares -
Diluted
47,856,286 47,539,871 
Weighted average number of ordinary shares -
Diluted
48,153,540 47,856,286 
Antidilutive awards (1)
Antidilutive awards (1)
69,900 105,485 
Antidilutive awards (1)
69,790 69,900 
Net income per ordinary share attributable to Fresh Del Monte Produce Inc.:Net income per ordinary share attributable to Fresh Del Monte Produce Inc.:  Net income per ordinary share attributable to Fresh Del Monte Produce Inc.:  
BasicBasic$0.54 $0.90 Basic$0.81 $0.54 
DilutedDiluted$0.54 $0.90 Diluted$0.81 $0.54 

(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.

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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 Quarter ended
April 1,
2022
April 2,
2021
March 31,
2023
April 1,
2022
Service costService cost$1.5 $1.6 Service cost$1.4 $1.5 
Interest costInterest cost1.3 1.3 Interest cost1.8 1.3 
Expected return on assetsExpected return on assets(0.7)(0.5)Expected return on assets(0.8)(0.7)
Amortization of net actuarial lossAmortization of net actuarial loss0.2 0.1 Amortization of net actuarial loss0.2 0.2 
Net periodic benefit costsNet periodic benefit costs$2.3 $2.5 Net periodic benefit costs$2.6 $2.3 
 
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 $0.5 million for the quarter ended March 31, 2023 and $0.8 million for the quarter ended April 1, 20222022.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

11.  Retirement and $0.9 million for the quarter ended April 2, 2021.Other Employee Benefits (continued)

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.


12.  Business Segment Data
 
Our business is comprised of 3three 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 ancillary businesses consisting of sales ofthird-party freight and logistic services business and our Jordanian poultry and meat products, a plastic product business, and third-party freight services.meats business.

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

Quarter ended Quarter ended
April 1, 2022April 2, 2021 March 31, 2023April 1, 2022
Segments:Segments:Net SalesGross ProfitNet SalesGross ProfitSegments:Net SalesGross ProfitNet SalesGross Profit
Fresh and value-added productsFresh and value-added products$672.7 $44.4 $631.0 $52.2 Fresh and value-added products$643.4 $47.1 $672.7 $44.4 
BananaBanana406.0 37.7 418.2 50.0 Banana425.1 43.2 406.0 37.7 
Other products and servicesOther products and services58.2 7.7 39.1 2.8 Other products and services60.0 6.7 58.2 7.7 
TotalsTotals$1,136.9 $89.8 $1,088.3 $105.0 Totals$1,128.5 $97.0 $1,136.9 $89.8 

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

Quarter ended
Net sales by geographic region:March 31,
2023
April 1,
2022
North America$667.2 $690.0 
Europe216.6 199.4 
Asia112.0 114.3 
Middle East101.8 103.1 
Other30.9 30.1 
Totals$1,128.5 $1,136.9 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

12.  Business Segment Data (continued)
Our segment data disclosures for the quarter ended April 2, 2021 have been adjusted to reflect a reclassification of cost of products sold between our three segments as a result of a refinement in our cost allocation methodology. The reclassification results in an increase to our fresh and value-added products segment gross profit of $0.6 million, an increase to our banana segment gross profit of $0.8 million and a decrease to our other products and services segment gross profit of $1.4 million.

Quarter ended
Net sales by geographic region:April 1,
2022
April 2,
2021
North America$690.0 $648.4 
Europe199.4 190.0 
Asia114.3 122.9 
Middle East103.1 104.8 
Other30.1 22.2 
Totals$1,136.9 $1,088.3 


The following table indicates our net sales by product (U.S. dollars in millions) and, in each case, the percentage of the total (U.S. dollars in millions):
 Quarter ended
April 1,
2022
April 2,
2021
Fresh and value-added products:
Fresh-cut fruit$122.0 11 %$113.1 10 %
Fresh-cut vegetables83.7 %88.9 %
Pineapples131.5 11 %124.0 11 %
Avocados89.8 %83.6 %
Non-tropical fruit63.4 %60.1 %
Prepared foods74.0 %74.5 %
Melons43.7 %27.0 %
Tomatoes6.5 %8.7 %
Vegetables36.0 %31.3 %
Other fruit and vegetables22.1 %19.8 %
Total fresh and value-added products672.7 59 %631.0 58 %
Banana406.0 36 %418.2 38 %
Other products and services58.2 %39.1 %
Totals$1,136.9 100 %$1,088.3 100 %
represented thereby:

 Quarter ended
March 31,
2023
April 1,
2022
Fresh and value-added products:
Fresh-cut fruit$124.7 11 %$122.0 11 %
Fresh-cut vegetables81.9 %83.7 %
Pineapples149.8 14 %131.5 11 %
Avocados64.7 %89.8 %
Non-tropical fruit61.3 %63.4 %
Prepared foods66.6 %74.0 %
Melons45.6 %43.7 %
Tomatoes5.4 — %6.5 %
Vegetables26.5 %36.0 %
Other fruit and vegetables16.9 %22.1 %
Total fresh and value-added products643.4 56 %672.7 59 %
Banana425.1 38 %406.0 36 %
Other products and services60.0 %58.2 %
Totals$1,128.5 100 %$1,136.9 100 %

13.  Derivative Financial Instruments

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


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

13.  Derivative Financial Instruments (continued)

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, (loss), 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 are in a liability position on April 1, 2022March 31, 2023 is $13.5$3.8 million. As of April 1, 2022,March 31, 2023, 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.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

13.  Derivative Financial Instruments (continued)

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.
 
Foreign Currency Hedges
 
We are exposed to fluctuations in currency exchange rates against the U.S. dollar on our results of operations and financial condition, and we mitigate that exposure by entering into foreign currency forward contracts. Certain of our subsidiaries periodically enter into foreign currency forward contracts in order to hedge portions of forecasted sales or cost of sales denominated in foreign currencies, which generally mature within one year. OurAt March 31, 2023, our foreign currency hedges were entered into for the purposeforward contracts hedge a portion of hedging portions of our 2022 and 2023 foreign currency exposure.
 
The foreign currency forward contracts qualifying as cash flow hedges were designated as single-purpose cash flow hedges of forecasted cash flows. 
 
We had the following outstanding foreign currency forward contracts as of April 1, 2022March 31, 2023 (in millions):

Foreign currency contracts qualifying as cash flow hedges:Notional amount
EuroEUR152.793.8 
British poundGBP18.118.4 
Japanese yenJPY8,225.71,820.2 
Chilean pesoCLP39,741.914,547.9 
Kenyan shillingKES2,113.32,949.6 
Korean wonKRW17,805.013,150.0 

Interest Rate Contracts
 
We are exposed to fluctuations in variable interest rates on our results of operations and financial condition, and we mitigate that exposure by entering into interest rate swaps. WeDuring 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. Refer to our discussion of New Accounting Pronouncements in Note 2, “Recently Issued Accounting Pronouncements” for further information.

Gains or losses on interest rate swaps are recorded in other comprehensive income (loss) and are subsequently reclassified into earnings as the interest expense on debt is recognized in earnings. At April 1, 2022,March 31, 2023, the notional value of interest rate contracts
outstanding was $400.0 million, with $200.0 million maturing in 2024 and the remaining $200.0 million maturing in 2028. Refer to Note 8, “
Debt and Finance Lease Obligations.
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13.  Derivative Financial Instruments (continued)

outstanding was $400.0 million, with $200.0 million maturing in 2024 and the remaining $200.0 million maturing in 2028. Refer to Note 8, “Debt and Finance Lease Obligations.

Bunker Fuel Hedges
We are exposed to fluctuations in bunker fuel prices on our results of operations and financial condition, and we periodically enter into bunker fuel swap agreements which permit us to lock in bunker fuel prices and mitigate that exposure. During fiscal 2020, one of our subsidiaries entered into bunker fuel swap agreements in order to hedge portions of our fuel expenses incurred by our owned and chartered vessels throughout 2020 and 2021. We designated our bunker fuel swap agreements as cash flow hedges. As of April 1, 2022, there were no outstanding bunker fuel hedges.

The following table reflects the fair values of derivative instruments, which are designated as level 2 in the fair value hierarchy, as of April 1, 2022March 31, 2023 and December 31, 202130, 2022 (U.S. dollars in millions):
 
Derivatives designated as hedging instruments (1)
Derivatives designated as hedging instruments (1)
Foreign exchange contractsInterest rate swapsTotalForeign exchange contractsInterest rate swapsTotal
Balance Sheet location:Balance Sheet location:April 1,
2022
December 31,
2021
April 1,
2022
December 31,
2021
April 1,
2022
December 31,
2021
Balance Sheet location:March 31,
2023
December 30,
2022
March 31,
2023
December 30,
2022
March 31,
2023
December 30,
2022
Asset derivatives:Asset derivatives:  Asset derivatives:  
Prepaid expenses and other current assetsPrepaid expenses and other current assets$9.3 $0.5 $— $— $9.3 

$0.5 Prepaid expenses and other current assets$0.8 $— $— $— $0.8 

$— 
Other noncurrent assetsOther noncurrent assets— — — — — — Other noncurrent assets— — 9.3 15.8 9.3 15.8 
Total asset derivativesTotal asset derivatives$9.3 $0.5 $— $— $9.3 $0.5 Total asset derivatives$0.8 $— $9.3 $15.8 $10.1 $15.8 
Liability derivatives:Liability derivatives:  Liability derivatives:  
Accounts payable and accrued expensesAccounts payable and accrued expenses$4.4 $8.1 $— $— $4.4 

$8.1 Accounts payable and accrued expenses$3.8 $6.5 $— $— $3.8 

$6.5 
Other noncurrent liabilitiesOther noncurrent liabilities2.9 6.1 6.2 29.4 9.1 

35.5 Other noncurrent liabilities— 0.2 — — — 

0.2 
Total liability derivativesTotal liability derivatives$7.3 $14.2 $6.2 $29.4 $13.5 $43.6 Total liability derivatives$3.8 $6.7 $— $— $3.8 $6.7 

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

We expect that $0.34.5 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 athe remaining net lossgain of $5.0$2.2 million over a period of approximately 6the 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 31, 2023 and April 1, 2022 and April 2, 2021 (U.S. dollars in millions):
 


Net amount of gain recognized in other
comprehensive income (loss) on derivatives

Net amount of gain (loss) recognized in other
comprehensive income (loss) on derivatives
Quarter ended Quarter ended
Derivative instruments
Derivative instruments
April 1,
2022
April 2,
2021
Derivative instruments
March 31,
2023
April 1,
2022
Foreign exchange contractsForeign exchange contracts$17.6 $11.1 Foreign exchange contracts$4.9 $17.6 
Bunker fuel swaps— 2.5 
Interest rate swaps, net of taxInterest rate swaps, net of tax20.2 12.0 Interest rate swaps, net of tax(4.9)20.2 
TotalTotal$37.8 $25.6 Total$— $37.8 

Refer to Note 15, “Accumulated Other Comprehensive Loss”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 31, 2023 and April 1, 2022 and April 2, 2021.2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

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.
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14.  Fair Value Measurements (continued)

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 measurementsFair value measurements
Foreign currency forward contracts, net asset (liability)Interest rate contracts, net liability Foreign currency forward contracts, net liabilityInterest rate contracts, net asset
April 1,
2022
December 31,
2021
April 1,
2022
December 31,
2021
March 31,
2023
December 30,
2022
March 31,
2023
December 30,
2022
Quoted prices in active markets for identical assets (Level 1)Quoted prices in active markets for identical assets (Level 1)$— $— $— $— Quoted prices in active markets for identical assets (Level 1)$— $— $— $— 
Significant observable inputs (Level 2)Significant observable inputs (Level 2)2.0 (13.7)(6.2)(29.4)Significant observable inputs (Level 2)(3.0)(6.7)9.3 15.8 
Significant unobservable inputs (Level 3)Significant unobservable inputs (Level 3)— — — — 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.
 
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 31, 2021.30, 2022.

In addition, certain definite-lived intangible assets related to our fresh and value-added products segment, which had a carrying value of $100.1 million as of the quarter ended March 31, 2023, are sensitive to changes in estimated cash flows. To the extent that future developments result in estimated cash flows that are less than currently estimated levels, it could lead to impairment of these assets.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

14.  Fair Value Measurements (continued)

During fiscal 2020, we performed a comprehensive review of our asset portfolio and identified non-strategic and underutilized property, plant, and equipment assets across various of our regions to dispose of while reducing costs and driving further efficiencies in our operations (the “Optimization Program”). Certain of these assets met the held for sale criteria as of April 1, 2022, and primarily relate to our fresh and value-added products segment. Included in the $18.2$21.9 million of assets held for sale as of April 1, 2022March 31, 2023 were the following: $7.1(i) $16.2 million is related to our plastics business in South America, and primarily included inventory, trade accounts receivable, and property, plant, and equipment, net, (ii) $2.4 million consists of a facility and related assets in the United States, $2.2 million is related to vacant land in Mexico, $3.9Europe, (iii) $2.3 million consists of facilities and farm land in South America, and (iv) the remaining $5.0$1.0 million consists of farm land and associated assets primarily located in Asia and Central America. These assetsIncluded in current liabilities held for sale are $2.1 million of accounts payable and accrued expenses associated with our plastics business in South America.

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.


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14.  Fair Value Measurements (continued)

During the quarter ended March 31, 2023, our 60% owned joint venture in Saudi Arabia completed the sale of two distribution centers and related assets which were previously held for sale. We received net proceeds of $66.1 million from the sale of these assets and recorded a gain on disposal of property, plant and equipment, net of $20.5 million. Contemporaneously with the execution of the sale and purchase agreement, we entered into an operating lease agreement in which we leased back approximately 31% of the facilities for a term of five years. The lease agreement allows for an option to renew for additional terms, subject to the written agreement of both parties.

Additionally, during the quarter ended March 31, 2023, we completed the sale of an idle production facility in North America which was previously held for sale. We received net proceeds of $23.0 million from the sale of this asset and recorded a gain on disposal of property, plant and equipment, net of $6.8 million. Contemporaneously with the execution of the sale and purchase agreement, we entered into an operating lease agreement in which we leased back a portion of the facility for a term of 21 months.

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 31, 2023
Balance at December 30, 2022Balance at December 30, 2022$6.0 $(36.0)$(11.5)$(41.5)
Other comprehensive income (loss)
before reclassifications
Other comprehensive income (loss)
before reclassifications
(0.4)(3)2.0 (2)(0.5)1.1 
Amounts reclassified from accumulated
other comprehensive loss
Amounts reclassified from accumulated
other comprehensive loss
0.4 

— 0.1 0.5 
Net current period other comprehensive
income (loss)
Net current period other comprehensive
income (loss)
— 2.0 (0.4)1.6 
Balance at March 31, 2023Balance at March 31, 2023$6.0 $(34.0)$(11.9)$(39.9)
Changes in Accumulated Other Comprehensive Loss by Component (1)
 Cash Flow HedgesForeign Currency Translation AdjustmentRetirement Benefit AdjustmentTotal
Quarter ended April 1, 2022Quarter ended April 1, 2022
Balance at December 31, 2021Balance at December 31, 2021$(40.9)$(17.4)$(8.6)$(66.9)Balance at December 31, 2021$(40.9)$(17.4)$(8.6)$(66.9)
Other comprehensive income (loss)
before reclassifications
Other comprehensive income (loss)
before reclassifications
33.5 (3)(7.4)(2)(0.3)25.8 Other comprehensive income (loss)
before reclassifications
33.5 (3)(7.4)(2)(0.3)

25.8 
Amounts reclassified from accumulated
other comprehensive loss
Amounts reclassified from accumulated
other comprehensive loss
4.3 

— 0.2 4.5 Amounts reclassified from accumulated
other comprehensive loss
4.3 — 0.2 4.5 
Net current period other comprehensive
income (loss)
Net current period other comprehensive
income (loss)
37.8 (7.4)(0.1)30.3 Net current period other comprehensive
income (loss)
37.8 (7.4)(0.1)30.3 
Balance at April 1, 2022Balance at April 1, 2022$(3.1)$(24.8)$(8.7)$(36.6)Balance at April 1, 2022$(3.1)$(24.8)$(8.7)$(36.6)
Quarter ended April 2, 2021
Balance at January 1, 2021$(49.6)$(3.3)$(24.1)$(77.0)
Other comprehensive income (loss)
before reclassifications
24.4 (3)(4.8)(2)(0.8)

18.8 
Amounts reclassified from accumulated
other comprehensive loss
1.2 (4)— 0.2 1.4 
Net current period other comprehensive
income (loss)
25.6 (4.8)(0.6)20.2 
Balance at April 2, 2021$(24.0)$(8.1)$(24.7)$(56.8)

(1) All amounts are net of tax and noncontrolling interest.
(2) Includes a gain of $0.8 million and a loss of $2.6 million and $3.4 million for the quarter ended April 1, 2022March 31, 2023 and quarter ended April 2, 2021,1, 2022, respectively, on intra-entity foreign currency transactions that are of a long-term-investment nature.
(3) Includes a tax effect of $(3.0)$1.5 million and $(1.8)$(3.0) million for the quarter ended April 1, 2022March 31, 2023 and quarter ended April 2, 2021,1, 2022, respectively.
(4) Includes amounts reclassified for both designated and dedesignated cash flow hedges. Refer to the following table for the amounts of each.






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FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

15.  Accumulated Other Comprehensive Loss (continued)

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
Quarter ended
Details about accumulated other comprehensive loss componentsApril 1, 2022April 2, 2021Affected line item in the statement where net income is presented
Cash flow hedges:
Designated as hedging instruments:
Foreign currency cash flow hedges$(1.6)$0.6 Net sales
Foreign currency cash flow hedges3.2 0.4 Cost of products sold
Interest rate swaps2.7 2.8 Interest expense
Bunker fuel swaps no longer designated as hedging instruments— (1.6)Cost of products sold
Bunker fuel swaps no longer designated as hedging instruments— (1.0)Other expense, net
Total$4.3 $1.2 
Amortization of retirement benefits:
Actuarial losses0.2 0.2 Other expense, net
Total$0.2 $0.2 

Amount of (gain) loss reclassified from accumulated other comprehensive loss
Quarter Ended
Details about accumulated other comprehensive loss componentsMarch 31, 2023April 1, 2022Affected line item in the statement where net income is presented
Cash flow hedges:
Designated as hedging instruments:
Foreign currency cash flow hedges$(0.1)$(1.6)Net sales
Foreign currency cash flow hedges2.2 3.2 Cost of products sold
Interest rate swaps(1.7)2.7 Interest expense
Total$0.4 $4.3 
Amortization of retirement benefits:
Actuarial losses0.1 0.2 Other expense, net
Total$0.1 $0.2 

16.  Shareholders’ Equity
 
Our shareholders have authorized 50,000,000 preferred shares at $0.01 par value, of which none are issued or outstanding at April 1, 2022,March 31, 2023, and 200,000,000 ordinary shares at $0.01 par value, of which 47,817,84347,998,746 are issued and outstanding at April 1, 2022.March 31, 2023.

The below is a summary of the dividends paid per share forduring the quartersquarter ended March 31, 2023 and quarter ended April 1, 2022 and April 2, 2021.2022. These dividends were declared and paid within the same fiscal quarter.
Quarter endedQuarter endedQuarter ended
April 1, 2022April 2, 2021
March 31, 2023March 31, 2023April 1, 2022
Dividend Payment DateDividend Payment DateCash Dividend per Ordinary ShareDividend Payment DateCash Dividend per Ordinary ShareDividend Payment DateCash Dividend per Ordinary ShareDividend Payment DateCash Dividend per Ordinary Share
April 1, 2022$0.15 April 2, 2021$0.10 
March 31, 2023March 31, 20230.15 April 1, 20220.15 

We paid $7.2 million in dividends during each of the quarterquarters ended March 31, 2023 and April 1, 2022 and $4.7 million in dividends during the quarter ended April 2, 2021.2022.

On May 3, 2022,2, 2023, our Board of Directors declared a quarterly cash dividend of fifteentwenty cents ($0.15)0.20) per share, payable on June 10, 2022,9, 2023, to shareholders of record on May 18, 2022.17, 2023.

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FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

17. Subsequent Events

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 allows the noncontrolling shareholder to sell its 25% noncontrolling interest to us for a multiple of the subsidiary's adjusted earnings. As the put option is outside of our control, the carrying value of the 25% noncontrolling interest is presented as a redeemable noncontrolling interest outside of permanent equity on our Consolidated Balance Sheet. At each reporting period, the redeemable noncontrolling interest is 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. At March 31, 2023, the redeemable noncontrolling interest had a carrying amount of $49.4 million. Effective April 1, 2023, the noncontrolling shareholder exercised its put option right and accordingly, we expect to close the purchase of the remaining 25% of this subsidiary during the second quarter of 2023 for approximately $5.2 million in cash consideration. The transaction will be treated as an equity transaction, with the differential between the redeemable noncontrolling interest carrying amount and cash purchase price being recognized as an increase in shareholders' equity on our Consolidated Balance Sheet.
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Item 2.        Management's Discussion and Analysis of Financial Condition and Results of Operations
 
Overview
 
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, (which includes Kenya), 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 producing operations are located in North, Central and South America, Asia and Africa.

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 ancillary businesses consisting of sales ofthird-party freight and logistic services business and our Jordanian poultry and meat products, a plastic product business, and third-party freight services.meats business.

Our vision is to inspire healthy lifestyles through wholesome and convenient products. Our strategy is founded on six goals:

strategy.jpg

COVID-19 PandemicCurrent Macroeconomic Environment and Current Economic EnvironmentInflation Impact

In March 2020, the World Health Organization declared the outbreak of coronavirus (“COVID-19”) a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. These factorsSince fiscal year 2021, we have resulted inbeen experiencing inflationary and cost pressures thatdue to volatility and disruption in the global economy which have increased our production and distribution costs due to a multitude of external factors. Specifically, costs of packaging materials, fertilizers, labor, fuel, and ocean and inland freight have significantly increased, and continue to adversely impact,affect our productionprofitability and distribution costs, including costs of packaging materials, fertilizer, labor, fuel, and ocean and inland freight.operating cash flows during the current fiscal year. We are also experiencing pressure on our supply chain dueexpect inflationary pressures to strained transportation capacity and lack of sufficient labor availability. In addition, the invasion of Ukraine by Russiapersist throughout 2023, although at lower levels than experienced in early 2022 has led to further economic disruption. While we do not operate in Ukraine and while our operations in Russia are not material, the conflict has exacerbated inflationary cost pressures and supply chain constraints which have negatively impacted the global economy and our business.


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2022.

In response to these ongoingpersisting inflationary and cost pressures, we began institutinginstituted price increases on the majority of our products during the latter part of 2021.products. Additionally, certain of our contracts for key products include contractually indexed fuel and freight surcharges that vary depending on commodity pricing. While weWe expect that these inflation-justified price increases and surcharges will continue to help mitigate our increased costs, our gross profit continues to be negatively impacted by these unfavorable market conditions as reflected in our first quarter of 2022 financial results. We believe these factors will continue to adversely impact our financial performance in future periods.costs.

The recent events surrounding the global economy and COVID-19 pandemic continue to evolve. Although we believe that we will ultimately emerge from these events well positioned for long-term growth, uncertainties remain and, as such, we cannot reasonably estimate the duration or extent
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Table of these adverse factors on our business, operating results, and long-term liquidity position.Contents

Optimization Program

During fiscal 2020, we performedbegan a comprehensive review of our asset portfolio, which we continuously update, aimed at identifying non-strategic and underutilized assets to dispose of while reducing costs and driving further efficiencies in our operations (hereon referred to as the “Optimization Program”).operations. As a result of the review, we identified assets across all of our regions, primarily consisting of underutilized facilities and land, which we made a strategic decision to sell for total anticipated cash proceeds of approximately $100.0 million. As ofsell. During the quarter ended April 1, 2022,March 31, 2023, we have received cash proceeds of $58.6 millionsold two distribution centers and related assets in connection with asset sales under the Optimization Program (approximately $57.0 million of which was received during fiscal years 2020Saudi Arabia and 2021). Due to challenging market conditions which have resultedan idle production facility in delays of some of the asset sales, in part driven by COVID-19 travel restrictions, the completion of the program has extended beyond the originally anticipated timeframe of the first quarter of 2022.North America.

Income Taxes

In connection with the examination of the tax returns in 2two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $156.5$152.1 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 as we believe that the proposed adjustments are without technical merit.

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 authoritiesauthorities' collection efforts for these two tax assessments, pending final judicial decisions. The court has granted our injunction with respect to the 2016 audit year, and has not yet ruledhowever 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 $5.7$7.0 million in connection with the grant of the 2016 audit year injunction. This real estate collateral has a net book value of $4.1$3.8 million as of the quarter ended April 1, 2022. ToMarch 31, 2023. In addition, in connection with the extent that we are granted the injunction forgrant of the 2012-2015 audit years,year injunction, we currently anticipate that additionalregistered real estate collateral with an approximate fair market value of approximately $25.0$28.0 million, would be required to be posted.and a net book value of $4.6 million as of the quarter ended March 31, 2023. 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.

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

Consolidated Financial Results

The following summarizes the more significant factors impacting our operating results for the quarter ended March 31, 2023 (also referred to as the “first quarter of 2023”) and April 1, 2022 (also referred to as the “first quarter of 2022”) and April 2, 2021 (also referred to as the “first quarter of 2021”).

Quarter endedQuarter ended
April 1,
2022
April 2,
2021
March 31,
2023
April 1,
2022
Net salesNet sales$1,136.9 $1,088.3 Net sales$1,128.5 $1,136.9 
Gross profitGross profit89.8 105.0 Gross profit97.0 89.8 
Selling, general and administrative expensesSelling, general and administrative expenses45.2 48.9 Selling, general and administrative expenses47.6 45.2 
Operating incomeOperating income39.8 59.7 Operating income74.5 39.8 

Net Salessales - Net sales for the first quarter of 2022 increased $48.62023 decreased $8.4 million, or approximately 5%1%, when compared with the first quarter of 2021. Net sales benefited from the inflation-justified price increases we implemented in the fourth quarter of 2021. Partially offsetting the increaseprior-year period. The decrease in net sales was impacted by lower per unit selling prices of avocados, lower sales volumes in the fresh and value-added products segment, and negative impact of fluctuations in exchange rates, primarily versusin Europe and Asia. Partially offsetting the eurodecrease in net sales were higher per unit selling prices across most other product categories and Japanese yen compared with the prior-year period. Additionally, lackhigher banana sales volume.
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Table of availability of third-party shipping capacity on certain shipping routes substantially limited the sales of various products. However, due to fluctuating market conditions, the impact cannot be quantified.Contents

Gross Profitprofit - Gross profit for the first quarter of 2022 was $89.82023 increased to $97.0 million compared with $105.0$89.8 million in the prior-year period driven by higher per unit selling prices across most product categories combined with lower distribution costs. Partially offsetting the increase in gross profit were higher production and procurement costs across most product categories and higher ocean freight cost. Gross profit in the first quarter of 2021. Despite higher net sales, gross profit was negatively impacted by worsening inflationary and2023 included $1.8 million of other cost pressures compared toproduct-related charges mostly consisting of inventory write-offs in connection with the prior-year period. Higher costs across-the-board including costssale of packaging materials, fertilizers, ocean and inland freight, fuel and labor offset our higher net sales. Additionally, fluctuationstwo distribution centers in exchange ratesSaudi Arabia. There were also unfavorable.no other product-related charges in the first quarter of 2022.

Selling, Generalgeneral and Administrative Expensesadministrative expenses - Selling, general and administrative expenses decreased $3.7increased by $2.4 million, or 8%5%, in the first quarter of 20222023 when compared with the first quarter of 2021.2022. The decreaseincrease was primarily due to lower administrative expenses in the current period.driven by higher employee compensation, professional services costs, and advertising and promotional expenses.

(Loss) Gain (loss) on Disposaldisposal of Property, Plantproperty, plant and Equipment, Netequipment, net - Thegain on disposal of property, plant and equipment, net for the first quarter of 2023 primarily related to a $20.5 million gain on the sale of two distribution centers and related assets in Saudi Arabia and a $6.8 million gain on the sale of an idle production facility in North America. The loss on disposal of property, plant and equipment, net of $(3.8) million during the first quarter of 2022 primarily related to the disposal of low-yielding banana plantscrops in Central America. The gain on disposal of property, plant and equipment, net of $2.7 million during the first quarter of 2021 primarily related to a gain on the sale of a refrigerated vessel.

Asset Impairmentimpairment and Other Charges (Credits), Netother charges, net - Asset impairment and other charges, (credits), net of $2.4 million in the current year period consisted of expenses incurred in connection with a cybersecurity incident which occurred during early 2023. The incident temporarily impacted certain of our operational and information technology systems. We were $1.0 million duringable to promptly recover our critical operational data and business systems and accordingly, the incident did not have a material impact on our financial results for the first quarter of 2022, as compared2023 and is not expected to have a material impact on future quarters. However, we did incur incremental costs primarily related to the engagement of specialized legal counsel and other incident response advisors. We maintain cyber incident insurance with $(0.9)a deductible of $1.0 million duringand expect to recover a significant portion of the first quarter of 2021. incurred charges above our deductible.

Asset impairment and other charges, (credits), net of $1.0 million for the first quarter of 2022 primarily related to severance expenses in connection with the departure of our former President and Chief Operating Officer. For the first quarter of 2021, asset impairment and other charges (credits), net primarily consisted of an insurance recovery associated with damages to fixed assets in Guatemala caused by two hurricanes in the fourth quarter of 2020.

Operating Incomeincome - Operating income decreasedincreased by $19.9$34.7 million in the first quarter of 20222023 when compared with the prior-year period. The decreaseincrease in operating income was primarily driven by lower gross profit and the net impact of disposalsgain on disposal of property, plant, and equipment, partially offset by lower selling, general and administrative expenses.
Interest Expense - Interest expensenet in the first quarter of 20222023 as compared to a net loss on disposal in the prior-year period, and higher gross profit.

Interest expense - Interest expense was relatively flathigher in the first quarter of 2023 when compared with the prior-year period.period due to higher interest rates.

Other Expense, Netexpense, net - Other expense, net increased by $1.9$5.3 million in the first quarter of 20222023 when compared with the first quarter of 2021 primarily as a result of the prior-year period including a gain2022, mainly due to higher foreign currency related to fuel derivatives that were no longer designated as hedging instruments, partially offset by lower foreign exchange losses in the current year period.losses.

Income Tax Provisiontax provision - Income tax provision was $9.5 million for the first quarter of 2023 compared with $5.8 million for the first quarter of 2022 when compared with $11.0 million for the first quarter of 2021.2022. The decreaseincrease in the income tax provision was primarily due to decreasedincreased earnings in certain higher tax jurisdictions.

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Financial Results by Segment

The following table presents net sales and gross profit by segment (U.S. dollars in millions), and in each case, the percentage of the total represented thereby and gross margin percentage:

Quarter ended Quarter ended
April 1, 2022April 2, 2021 March 31, 2023April 1, 2022
Segment SegmentNet SalesGross ProfitGross MarginNet SalesGross ProfitGross Margin SegmentNet SalesGross ProfitGross MarginNet SalesGross ProfitGross Margin
Fresh and value-added productsFresh and value-added products$672.7 59 %$44.4 49 %6.6 %$631.0 58 %$52.2 50 %8.3 %Fresh and value-added products$643.4 57 %$47.1 49 %7.3 %$672.7 59 %$44.4 49 %6.6 %
BananaBanana406.0 36 %37.7 42 %9.3 %418.2 38 %50.0 47 %12.0 %Banana425.1 38 %43.2 45 %10.2 %406.0 36 %37.7 42 %9.3 %
Other products and servicesOther products and services58.2 %7.7 %13.1 %39.1 %2.8 %7.3 %Other products and services60.0 %6.7 %11.2 %58.2 %7.7 %13.1 %
TotalsTotals$1,136.9 100 %$89.8 100 %7.9 %$1,088.3 100 %$105.0 100 %9.7 %Totals$1,128.5 100 %$97.0 100 %8.6 %$1,136.9 100 %$89.8 100 %7.9 %

First Quarter of 20222023 Compared with First Quarter of 20212022

Fresh and value-added products

Net sales for the first quarter of 2022 increased2023 decreased by $41.7$29.3 million, or 7%4%, when compared with the prior-year period, primarily as a result of increased netlower per unit selling prices of avocados due to market volatility combined with a decrease in total sales across most product categoriesvolume for the segment, mostly of fresh-cut vegetables, prepared foods, vegetables, and to a lesser extent, fresh-cut fruit. The lower sales volume for fresh-cut vegetable and vegetable products was primarily due to proactive steps taken to improve profitability. We expect these conditions to continue in the upcoming quarter. The decrease was partially offset by higher pricing.per unit selling prices across most other product categories and higher pineapple sales volume.

Gross profit for the first quarter of 2022 was $44.42023 increased to $47.1 million compared with $52.2$44.4 million in the first quarter of 2021.prior-year period. Despite higherlower net sales, gross profit in thewas positively impacted by higher per unit selling prices for most product categories. The segment continued to be negatively impacted by inflationary and other cost pressures which resulted in higher per unit production and distribution costs. Specifically, the cost of raw materials such as packaging materials and fertilizers as well as higher ocean and inland freight labor, and fuel increased compared with the prior-year period. In addition, lower gross profit of melons, a seasonal product, negatively impacted segment performance. As a result, gross margin decreased to 6.6% compared with 8.3% in the prior-year period.

costs. Gross profit infor the fresh and value-added products segment included $3.1$1.7 million of other product-related charges in the first quarter of 2021 related to2023, primarily consisting of inventory write-offs in connection with the sale of non-tropical fruit caused by severe rainstormstwo distribution centers in Chile.Saudi Arabia. There were no other product-related charges in the first quarter of 2022. Gross margin increased to 7.3% compared with 6.6% in the prior-year period.

Banana

Net sales for the first quarter of 2022 decreased2023 increased by $12.2$19.1 million, or 3%5%, when compared with the prior-year period, primarily as a result of lowerhigher per unit selling prices in most regions and higher sales volume in North America partially offsetand Europe. Net sales of banana were negatively impacted by increased pricing.fluctuations in exchange rates, primarily in Europe and Asia.

Gross profit for the first quarter of 2022 was $37.72023 increased to $43.2 million compared with $50.0$37.7 million in the first quarter of 2021. Despite2022. The increase in gross profit was primarily driven by higher pricing compared to the prior-year period,net sales, partially offset by higher costprocurement and lower sales volume negatively impacted gross profit. Specifically, the cost ofproduction costs, including packaging materials fertilizers, ocean and inland freight, fuel, and labor, increased compared with the first quarter of 2021.as well as higher ocean freight cost. As a result of these combined factors, gross margin decreasedincreased to 9.3%10.2% compared with 12.0%9.3% in the prior-year period.

Gross profit for the banana segment included a $1.5 million net insurance recovery in the first quarter of 2021 associated with hurricane damages in Central America in the fourth quarter of 2020. There were no other product-related charges in the first quarter of 2022.

Other products and services

Net sales for the first quarter of 20222023 increased $19.1by $1.8 million, or 49%3%, when compared with the prior-year period mainly due to higher net sales of third-party freight services. Our fleet of vessels has enabled the expansion of our commercial cargo services, which are benefiting from elevated shipping rates and demand due to current supply chain constraints and inflationary pressures.

Gross profit increased $4.9decreased by $1.0 million as a result of higher net sales.costs. Gross margin increaseddecreased to 13.1%11.2% from 7.3%13.1%.



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Liquidity and Capital Resources

Fresh Del Monte Produce Inc. is a holding company with limited business operations of its own. Fresh Del Monte Produce Inc.'swhose only significant asset is the outstanding capital stock of our
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subsidiaries that directly or indirectly own all of our assets. We conduct all of our business operations through our subsidiaries. Accordingly, our only source of cash to pay our obligations, other than financings, depends primarily on the net earnings and cash flow generated by these subsidiaries.

Our primary sources of cash flow are net cash provided by operating activities and borrowings under our credit facility. Our primary uses of net cash flow are capital expenditures to increase our productivity and expand our product offerings and geographic reach, investments to increase our productivity and investments in businesses such as Mann Packing.reach.

A summary of our cash flows is as follows (U.S. dollars in millions):
Quarter endedQuarter ended
April 1, 2022April 2, 2021March 31, 2023April 1, 2022
Summary cash flow information:Summary cash flow information:Summary cash flow information:
Net cash (used in) provided by operating activities$(0.3)$46.8 
Net cash used in investing activities(16.6)(25.9)
Net cash provided by (used in) financing activities26.7 (12.7)
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities$15.5 $(0.3)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities79.6 (16.6)
Net cash (used in) provided by financing activitiesNet cash (used in) provided by financing activities(75.9)26.7 
Effect of exchange rate changes on cashEffect of exchange rate changes on cash(0.6)1.7 Effect of exchange rate changes on cash(0.7)(0.6)
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents9.2 9.9 Net increase in cash and cash equivalents18.5 9.2 
Cash and cash equivalents, beginning Cash and cash equivalents, beginning16.1 16.5  Cash and cash equivalents, beginning17.2 16.1 
Cash and cash equivalents, ending Cash and cash equivalents, ending25.3 26.4  Cash and cash equivalents, ending$35.7 $25.3 

Operating Activities

Net cash provided by operating activities was $15.5 million for the first quarter of 2023 compared with net cash used in operating activities wasof $0.3 million for the first quarter of 2022, compared with net cash provided by operating activitiesan increase of $46.8 million for the first quarter of 2021, a decrease of $47.1$15.8 million. The decreaseincrease was primarily attributable to (1) lower net income, (2) higher levels of accounts receivable,working capital fluctuations, mainly due to higher sales in the current period anddriven by (i) the timing of collections of accounts receivable and (3) higher levels of finished goods(ii) a larger decrease in raw materials and packaging supplies inventory in part driven by the current year period due to a strategic increase in cost of goods as a result of inflationary cost pressures.

At April 1, 2022, we had working capital of $541.7 million compared with $467.2 million at December 31, 2021, an increase of $74.5 million. The increaselevels in working capital was mainly duethe prior year to higher levels of receivables, primarily due to seasonal variationssecure costs and higher sales prices, and higher levels of finished goods inventory.availability. Partially offsetting the increase in working capital were higherlower levels of accounts payable and accrued expenses, primarily due to the increase in inventory purchases combined with the timing of period end payments to suppliers.

At March 31, 2023, we had working capital of $642.9 million compared with $634.4 million at December 30, 2022, an increase of $8.5 million. The increase in working capital was primarily due to higher levels of accounts receivable and finished goods inventory, mainly driven by seasonal variations, and a higher balance of cash on hand due to the timing of the asset sales during the current quarter. The increase was partially offset by lower levels of assets held for sale and raw materials and packaging supplies inventory.

Investing Activities

Net cash used inprovided by investing activities for the first quarter of 20222023 was $16.6$79.6 million compared with $25.9net cash used in investing activities of $16.6 million for the first quarter of 2021. 2022. Net cash provided by investing activities for the first quarter of 2023 primarily consisted of proceeds from the sale of property, plant and equipment of $90.7 million which mainly related to the sales of two distribution centers in Saudi Arabia and an idle production facility in North America. Partially offsetting the net cash provided by investing activities were capital expenditures of $10.0 million which mainly included expenditures related to (i) improvements to our pineapple operations in Central America and Kenya, (ii) investments in our operations and production facilities in North America benefiting both our fresh and value-added products and banana segments, including expenditures related to automation and technology initiatives, and (iii) improvements to our value-added production facilities in Europe and the Middle East.

Net cash used in investing activities for the first quarter of 2022 primarily consisted of capital expenditures of $11.1 million, which mainly included expenditures related to (1)(i) improvements to our operations and production facilities in North America, including operational investments in automation and data-driven technology, (2)(ii) improvements to our pineapple operations in Central America and Kenya, and (3)(iii) improvements to and expansion of our banana operations in Central America. Net cash used in investing activities for the first quarter of 2022 also reflectsreflected $7.1 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision. Partially offsetting the net cash used in investing activities were proceeds from the sale of property, plant and equipment of $1.6 million.

Net cash used in investing activities for the first quarter of 2021 primarily consisted of capital expenditures of $33.6 million, mainly related to the purchase of our refrigerated container ships and expansion and improvements to facilities in North America and Asia. These capital expenditures related to both our banana and fresh and value-added products business segments. Partially offsetting the net cash used in investing activities were $4.6 million in proceeds from the settlement of
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derivative instruments which were no longer designated in hedging relationships and $2.9 million in proceeds from the sale of property, plant and equipment.

Financing Activities

Net cash provided byused in financing activities for the first quarter of 20222023 was $26.7$75.9 million compared with net cash used inprovided by financing activities of $12.7$26.7 million for the first quarter of 2021. 2022. Net cash used in financing activities for the first quarter of 2023 primarily consisted of net repayments on debt of $67.1 million and dividends paid of $7.2 million.

Net cash provided by financing activities for the first quarter of 2022 primarily consisted of net borrowings on debt of $35.0 million, partially offset by dividends paid of $7.2 million.

Net cash usedAs part of the Mann Packing acquisition in financing activities2018, we acquired a put option exercisable by the 25% shareholder of one of the acquired subsidiaries. The put option allows the noncontrolling shareholder to sell its 25% noncontrolling interest to us for a multiple of the firstsubsidiary's adjusted earnings. Effective April 1, 2023, the noncontrolling shareholder exercised its put option right and accordingly, we expect to close the purchase of the remaining 25% of this subsidiary during the second quarter of 2021 primarily consisted of net repayments2023 for approximately $5.2 million in cash consideration, which we expect to fund from cash on debt of $7.7 millionhand. The transaction will be treated as an equity transaction, with the differential between the redeemable noncontrolling interest carrying amount on our Consolidated Balance Sheet and dividends paid of $4.7 million.the cash purchase price being recognized as an increase in shareholders' equity.

Debt Instruments and Debt Service Requirements

On October 1, 2019, we and certain of our subsidiaries entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) with the financial institutions and other lenders named therein, including Bank of America, N.A. as administrative agent and BofA Securities, Inc. as sole lead arranger and sole bookrunner. The Second A&R Credit Agreement provides for a five-year, $1.1$0.9 billion syndicated senior unsecured revolving credit facility (the “Revolving Credit Facility”) maturing on October 1, 2024. Certain of our direct and indirect subsidiaries have guaranteed the obligations under the Second A&R Credit Agreement. We intend to use funds borrowed under the Second A&RRevolving Credit AgreementFacility from time to time for general corporate purposes, working capital, capital expenditures and other permitted investment opportunities.

On December 30, 2022, we and certain of our subsidiaries executed Amendment No. 1 to the Second A&R Credit Agreement (the “Amendment”) with the financial institutions and other lenders named therein, including Bank of America, N.A. as administrative agent and BofA Securities, Inc. as sole lead arranger and sole bookrunner. Pursuant to the Amendment, the reference interest rate on the Revolving Credit Facility was amended to replace the Eurocurrency Rate with the Term Secured Overnight Financing Rate (“Term SOFR”) effective January 3, 2023. As amended, Term Loans made under the Revolving Credit Facility can be Base Rate Loans, Term SOFR Loans or Alternative Currency Term Rate Loans. All other material terms of the Second A&R Credit Agreement, as amended, remain unchanged.
Effective January 3, 2023, amounts borrowed under the Revolving Credit Facility accrue interest, at our election, at either (i) the EurocurrencyTerm SOFR Rate (as defined in the Second A&R Credit Agreement) plus a margin that ranges from 1.0% to 1.5% or (ii) the Base Rate (as defined in the Second A&R Credit Agreement) plus a margin that ranges from 0% to 0.5%, in each case based on our Consolidated Leverage Ratio (as defined in the Second A&R Credit Agreement). The Second A&R Credit Agreement interest rate grid provides for five pricing levels for interest rate margins. At April 1, 2022,March 31, 2023, we had borrowings of $554.1$472.7 million outstanding under the Revolving Credit Facility bearing interest at a per annum rate of 1.83%6.03%. In addition, we pay an unused commitment fee.
The Second A&R Credit Agreement 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 2.50 to 1.00. Our ability to request such increases in the Revolving Credit Facility or term loans is subject to its compliance with customary conditions set forth in the Second A&R Credit Agreement including compliance, on a pro forma basis, with the financial covenants and ratios set forth therein. 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 Second A&R Credit Agreement requires us to comply with certain financial and other covenants. Specifically, it requires us to maintain a 1) Consolidated Leverage Ratio of not more than 3.50 to 1.00 at any time during any period of four consecutive fiscal quarters, subject to certain exceptions and 2) a 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 expenditures, stock repurchases, the amount of dividends that can be paid in the future, the amount and types of liens
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and indebtedness, material asset sales, and mergers. Under the Second A&R Credit Agreement, 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 the greater of (A) 50% of the Consolidated Net Income (as defined in the Second A&R Credit Agreement) for the immediately preceding fiscal year or (B) $25 million or (ii) the greatest amount which would not cause the Consolidated Leverage Ratio (determined on a pro forma basis) to exceed 3.25 to 1.00. It also provides an allowance for stock repurchases to be an amount not exceeding the greater of (i) $150 million in the aggregate or (ii) the amount that, after giving pro forma effect thereto and any related borrowings, will not cause the Consolidated Leverage Ratio to exceed 3.25 to 1.00. As of April 1, 2022,March 31, 2023, we were in compliance with all of the financial and other covenants contained in the Second A&R Credit Agreement.

We have a renewable 364-day, $25.0 million letter of credit facility with Rabobank Nederland.

As of April 1, 2022,March 31, 2023, we had $571.9$461.5 million of borrowing availability under committed working capital facilities, primarily under the Revolving Credit Facility.
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As of April 1, 2022, we applied $28.2 million to letters of credit and bank guarantees issued from Rabobank Nederland, Bank of America, and other banks.

While weWe believe that our cash on hand, borrowing capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months,months. However, we cannot predict whether future developments associated with the current economic environment or COVID-19 pandemic will materially adversely affect our long-term liquidity position. Our liquidity assumptions, the adequacy of our available funding sources, and our ability to meet our Revolving Credit Facility covenants are dependent on many additional factors, including those set forth in “Item 1A. Risk Factors” of our Form 10-K for the year ended December 31, 2021.30, 2022.

Contractual Obligations

As of April 1, 2022,March 31, 2023, there were no material changes in our commitments or contractual obligations as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.30, 2022.

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies and estimates can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K for the fiscal year ended December 31, 2021.30, 2022. There were no material changes to these critical accounting policies or estimates during the first quarter of 2022.2023.

Fair Value Measurements

We are exposed to fluctuations in currency exchange rates against the U.S. dollar on our results of operations and financial condition, and we mitigate that exposure by entering into foreign currency forward contracts. Certain of our subsidiaries periodically enter into foreign currency forward contracts in order to hedge portions of forecasted sales or cost of sales denominated in foreign currencies with forward contracts and options, which generally expire within one year. The fair value of our foreign currency cash flow hedges was a net assetliability position of $2.0$3.0 million as of April 1, 2022March 31, 2023 compared to a net liability position of $13.7$6.7 million as of December 31, 202130, 2022 due to the relative strengthening or weakening of exchange rates when compared to contracted rates.

We are exposed to fluctuations in variable interest rates on our results of operations and financial condition, and we mitigate that exposure by entering into interest rate swaps from time to time. During 2018, we entered into interest rate swaps in order to hedge the risk of the fluctuation on future interest payments related to a portion of our variable rate LIBOR-based borrowings through 2028. The fair value of our interest rate swap cash flow hedges was a net liabilityan asset position of $6.2$9.3 million as of April 1, 2022March 31, 2023 compared to $29.4an asset position of $15.8 million as of December 31, 2021.30, 2022. The decreasechange in our liability position isvalue was due to the relative increasedecrease in variable interest rates when compared to the rates as of December 31, 2021.30, 2022. In connection with the Amendment of our Revolving Credit Facility, we amended our interest rate swaps to transition from LIBOR to Term SOFR effective January 3, 2023.

We enter into derivative instruments with counterparties that are highly rated and do not expect a deterioration of our counterparty’s credit ratings; however, the deterioration of our counterparty’s credit ratings would affect the Consolidated Financial Statements in the recognition of the fair value of the hedges that would be transferred to earnings as the contracts settle. We expect that $0.3$4.5 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 athe remaining net lossgain of $5.0$2.2 million over a period of approximately 65 years, along with the earnings effect of the related forecasted transactions.

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 trade names and trademarks in our Annual Report on Form 10-K
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for the year ended December 31, 2021.30, 2022. During the quarter ended April 1, 2022,March 31, 2023, we did not record impairment charges associated with these reporting units or trade names and trademarks, however we continue to monitor their performance.

Potential impairment exists if the fair value of a reporting unit to which goodwill has been allocated is less than the carrying value of the reporting unit. Future changes in the estimates used to conduct our impairment review, including our financial projections and changes in the discount rates used, could cause the analysis to indicate that our goodwill or trade names and trademarks are impaired in subsequent periods and result in a write-off of a portion or all of goodwill or trade names and trademarks.

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In addition, certain definite-lived intangible assets related to our fresh and value-added products segment are sensitive to changes in estimated cash flows. To the extent that future developments result in estimated cash flows that are less than currently estimated levels, it could lead to impairment of these assets.

New Accounting Pronouncements

Refer to Note 2. “Recently Issued Accounting Pronouncements to the accompanying unaudited consolidated financial statements for a discussion of recent accounting pronouncements.

Seasonality
 
Interim results are subject to significant variations and may not be indicative of the results of operations that may be expected for thean entire 2022 fiscal year. Due to seasonal sales price fluctuations, we have historically realized a greater portion of our net sales and gross profit during the first two calendar quarters of the year. The sales price of any fresh produce item fluctuates throughout the year due to the supply of and demand for that particular item, as well as the pricing and availability of other fresh produce items, many of which are seasonal in nature. See the information under the caption “Seasonality” provided in Item 1. Business, of our Annual Report on Form 10-K for the year ended December 31, 2021.30, 2022.

Forward-Looking Statements

This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Specifically, this quarterly report contains forward-looking statements regarding:
our expectations regarding future financial and operational performance, including gross margins for our business as a whole and our reporting segments;
our expectations regarding the impacts of the COVID-19 pandemic on our business and operating results, and the factors for such impacts;performance;
our intentions regarding the use of borrowed funds;
our expectations regarding continued inflationary pressures, our ability to mitigate such pressures through pricing, and the impacts to our operating results;
our expectations regarding market conditions and volatility, and their impact on our operating results;
our beliefs related to the sufficiency of our capital resources, including that our cash on hand, capacity under our Revolving Credit Facility and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months;
our expectations regarding our derivative instruments, including our counterparties’ credit ratings and the anticipated impacts on our financials;
our plans regardingexpectations on the impact of the cybersecurity incident on our Optimization Program, including our intention to sell identified assetsoperating results and the anticipated valuerecovery of such sales;certain expenses incurred in connection therewith;
our expectations and estimates regarding certain legal, tax and accounting matters, including our litigation strategy, plans and beliefs regarding the ultimate outcome of income tax adjustments assessed by foreign taxing authorities;
our belief that certain proposed adjustments by taxing authorities are without merit, our ability to contest the adjustments and our plans to contest such adjustments;
our beliefs related to the sufficiency of our capital resources;
our expectations concerning the fair value of hedges, including the timing and impact to our results;
our expectations regarding estimated liabilities related to environmental cleanup; and
our plans and future performance.

These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. These various factors include, but are not limited to, the following:
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the impact of the ongoing pandemic and the war in Ukraine on our business, suppliers, customers, consumers, employees, and communities, including the inflationary impact on fuel, petroleum-based products such as fertilizer and packaging materials;
disruptions or inefficiencies in our operations and supply chain, including any impact of the pandemic, the war in Ukraine and the inflationary environment;
the impact of inflation;
the duration and spread of the pandemic and related government restrictions andinflation on our ability to maintain the safety of our workforce, especially outside the U.S.;operations;
our ability to successfully execute our long-term strategy;
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the impact of governmental trade restrictions, including adverse governmental regulation that may impact our ability to access certain markets;
the ability to meet our anticipated cash needs;
the continued ability of our distributors and suppliers to have access to sufficient liquidity to fund their operations;
the impact of disruptions or breaches of our technology or information system security measures, or of third parties we rely upon;
the impact of product and raw material supply and pricing, as well as prices for petroleum-based products and packaging materials;
the impact of pricing and other actions by our competitors, particularly during periods of low consumer confidence and spending levels;
trends and other factors affecting our financial condition or results of operations from period to period, including changes in product mix, consumer preferences or consumer demand for branded products such as ours; anticipated price and expense levels;
the impact of crop disease, such as vascular diseases, one of which is known as Tropical Race 4, or TR4 (also known as Panama Disease);
our ability to find contingency plans to protect our and our suppliers’ banana crops from vascular diseases;
competitive pressures and our ability to realize the full benefits of the inflation driven price increases implemented;
disruptions or issues that impact our production facilities or complex logistics network;networks;
the availability of sufficient labor during peak growing and harvesting seasons;
the impact of foreign currency fluctuations, including the effectiveness of our hedging activities;
inability to realize expected benefits on plans for expansion of our business (including through acquisitions);
our ability to successfully integrate acquisitions and new product lines into our operations;
the impact of impairment or other charges associated with exit activities, crop or facility damage or otherwise,
the timing and cost of resolution of pending and future legal and environmental proceedings or investigation;
the impact of changes in tax accounting or tax laws (or interpretations thereof), the impact of claims or adjustments proposed by the Internal Revenue Service or other foreign taxing authorities in connection with our current or future tax audits and our ability to successfully contest such tax claims and pursue necessary remedies;
the success of our joint ventures;
the impact of severe weather conditions and natural disasters, such as flooding and earthquakes, on crop quality and yields and on our ability to grow, procure or export our products;
the adequacy of our insurance coverage;
the cost and other implications of changes in regulations applicable to our business, including potential legislative or regulatory initiatives in the United States or elsewhere directed at mitigating the effects of climate change;
damage to our reputation or brand names or negative publicity about our products;
exposure to product liability claims and associated regulatory and legal actions, product recalls, or other legal proceedings relating to our business;
our ability to continue to comply with covenants and the terms of our credit instruments and our ability to obtain additional financing to fund our capital expenditures;
our ability to successfully implement our Optimization Program and to realize its expected benefits; and
our ability to successfully manage the risks associated with international operations, including risks relating to political or economic conditions, inflation, tax laws, currency restrictions and exchange rate fluctuations, legal or judicial systems.

All forward-looking statements in this report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our plans and performance may also be affected by the factors described in our most recent Annual Report on Form 10-K along with other reports that we file with the Securities and Exchange Commission.
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Item 3.        Quantitative and Qualitative Disclosures About Market Risk
 
There have been no material changes in market risk from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our Annual Report on Form 10-K for the year ended December 31, 2021.30, 2022.

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Item 4.        Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of April 1, 2022.March 31, 2023. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. Such officers also confirm that there were no changes to our internal control over financial reporting during the quarter ended April 1, 2022March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.        Legal Proceedings

Tax related matters

In connection with the examination of the tax returns in 2two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $156.5$152.1 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 as we believe that the proposed adjustments are without technical merit.

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 authoritiesauthorities' collection efforts for these two tax assessments, pending final judicial decisions. The court has granted our injunction with respect to the 2016 audit year, and has not yet ruledhowever 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 $5.7$7.0 million in connection with the grant of the 2016 audit year injunction. This real estate collateral has a net book value of $4.1$3.8 million as of the quarter ended April 1, 2022. ToMarch 31, 2023. In addition, in connection with the extent that we are granted the injunction forgrant of the 2012-2015 audit years,year injunction, we currently anticipate that additionalregistered real estate collateral with an approximate fair market value of approximately $25.0$28.0 million, would be required to be posted.and a net book value of $4.6 million as of the quarter ended March 31, 2023. 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.

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

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Item 6.        Exhibits 
4.2**
31.1**
  
31.2**
  
32*
101.INS***Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
  
101.SCH***Inline XBRL Taxonomy Extension Schema Document.
  
101.CAL***Inline XBRL Taxonomy Extension Calculation Linkbase Document.
  
101.DEF***Inline XBRL Taxonomy Extension Definition Linkbase Document.
  
101.LAB***Inline XBRL Taxonomy Extension Label Linkbase Document.
  
101.PRE***Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
_____________________
*    Furnished herewith.
**    Filed herewith.
***    Attached as Exhibit 101 to this report are the following formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of April 1, 2022March 31, 2023 and December 31, 2021,30, 2022, (ii) Consolidated Statements of Operations for the quarters ended March 31, 2023 and April 1, 2022, and April 2, 2021, (iii) Consolidated Statements of Comprehensive Income for the quarters ended March 31, 2023 and April 1, 2022, and April 2, 2021, (iv) Consolidated Statements of Cash Flows for the quarters ended March 31, 2023 and April 1, 2022, and April 2, 2021, (v) Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interest for the quarters ended March 31, 2023 and April 1, 2022 and April 2, 2021 and (vi) Notes to Consolidated Financial Statements.
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 Fresh Del Monte Produce Inc.
   
Date:May 4, 20223, 2023By:
/s/ Mohammed Abbas
  Mohammed Abbas
  Executive Vice President & Chief Operating Officer
   
 By:
/s/ Monica Vicente
  Monica Vicente
  Senior Vice President & Chief Financial Officer
 
 

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