<PAGE> 1
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the quarter ended March 31, 2000
FRESH DEL MONTE PRODUCE INC.
(Exact Name of Registrant as Specified in Its Charter)
THE CAYMAN ISLANDS
(State or Other Jurisdiction of
Incorporation or Organization)
C/O DEL MONTE FRESH PRODUCE COMPANY
800 DOUGLAS ROAD
NORTH TOWER, 12TH FLOOR
CORAL GABLES, FLORIDA 33134
(Address of Registrant's Principal Executive Offices)
[Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.]
Form 20-F [X] Form 40-F [ ]
[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.]
Yes [ ] No [X]
==============================================================================
<PAGE> 2
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED BALANCE SHEETS
(U.S. DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
UNAUDITED
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 22.5 $ 31.2
Trade accounts receivable, net of allowance of $13.5 and
$9.9, respectively 183.2 136.4
Advances to growers and other receivables, net of allowance
of $4.5 and $4.5, respectively 53.5 52.3
Inventories 228.1 198.9
Prepaid expenses and other current assets 13.4 13.4
----------- -----------
Total current assets 500.7 432.2
----------- -----------
Investments in unconsolidated companies 53.6 51.9
Property, plant and equipment, net 610.7 590.6
Other noncurrent assets 60.2 62.1
Goodwill, net of accumulated amortization of $6.8 and $5.9,
respectively 78.8 79.4
----------- -----------
Total assets $ 1,304.0 $ 1,216.2
=========== ===========
</TABLE>
See accompanying notes
1
<PAGE> 3
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(U.S. DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
UNAUDITED
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 3.8 $ 3.2
Accounts payable and accrued expenses 228.7 195.2
Current portion of long-term debt and capital lease
obligations 27.8 24.9
Income taxes payable 6.3 5.2
---------- ----------
Total current liabilities 266.6 228.5
---------- ----------
Long-term debt 472.5 467.7
Capital lease obligations 18.1 8.3
Retirement benefits 55.4 53.9
Other noncurrent liabilities 5.9 8.7
Deferred income taxes 10.3 11.3
Minority interest 11.7 12.0
---------- ----------
Total liabilities 840.5 790.4
---------- ----------
Commitments and contingencies
Shareholders' equity:
Preferred shares, $0.01 par value; 50,000,000 shares
authorized; none issued or outstanding -- --
Ordinary shares, $0.01 par value; 200,000,000 shares
authorized; 53,763,600 shares issued and outstanding 0.5 0.5
Paid-in capital 327.1 327.1
Retained earnings 145.6 107.1
Accumulated other comprehensive loss (9.7) (8.9)
---------- ----------
Total shareholders' equity 463.5 425.8
---------- ----------
Total liabilities and shareholders' equity $ 1,304.0 $ 1,216.2
========== ==========
</TABLE>
See accompanying notes
2
<PAGE> 4
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(U.S. DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------
MARCH 31, APRIL 2,
2000 1999
--------- --------
<S> <C> <C>
Net sales $ 536.1 $ 493.4
Cost of products sold 464.8 428.5
-------------- --------------
Gross profit 71.3 64.9
Selling, general and administrative expenses 20.8 17.4
Amortization of goodwill 0.9 0.4
-------------- --------------
Operating income 49.6 47.1
Interest expense 10.2 7.7
Interest income 0.8 0.7
Other income (loss), net (0.6) 0.2
-------------- --------------
Income before provision for income taxes 39.6 40.3
Provision for income taxes 1.1 4.9
-------------- --------------
Net income $ 38.5 $ 35.4
============== ==============
Basic and diluted per share income $ 0.72 $ 0.66
============== ==============
Weighted average number of ordinary shares outstanding:
Basic 53,763,600 53,763,600
Diluted 53,766,731 53,959,119
</TABLE>
See accompanying notes
3
<PAGE> 5
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(U.S. DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------
MARCH 31, APRIL 2,
2000 1999
--------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 38.5 $ 35.4
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Goodwill amortization 0.9 0.4
Depreciation and amortization other than goodwill 12.8 10.6
Deferred credit vessel leases (1.4) (1.2)
Equity in earnings of unconsolidated companies, net of
dividends (1.9) (1.3)
Gain on insurance proceeds related to Hurricane Mitch -- (3.5)
Deferred income taxes (1.0) 0.8
Other, net 2.4 1.9
Changes in operating assets and liabilities:
Receivables (48.2) (46.8)
Inventories (29.6) (35.6)
Accounts payable and accrued expenses 35.2 3.1
Prepaid expenses and other current assets -- 17.3
Other noncurrent assets and liabilities (1.6) (2.4)
----- -----
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 6.1 (21.3)
INVESTING ACTIVITIES:
Capital expenditures (17.9) (14.1)
Capital expenditures due to Hurricane Mitch, net of
insurance proceeds (1.1) 0.8
Proceeds from sale of assets 0.2 --
Purchase of Belgian subsidiary -- (58.7)
Net investment in and advances to unconsolidated companies -- (0.7)
Other investing activities, net 0.6 0.4
----- -----
NET CASH USED IN INVESTING ACTIVITIES (18.2) (72.3)
</TABLE>
See accompanying ntoes
4
<PAGE> 6
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
UNAUDITED
(U.S. DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------
MARCH 31, APRIL 2,
2000 1999
--------- --------
<S> <C> <C>
FINANCING ACTIVITIES:
Proceeds from long-term debt $ 75.2 $ 114.1
Payments on long-term debt (70.4) (27.7)
Proceeds from short-term borrowings 1.1 4.7
Payments on short-term borrowings (0.5) (0.1)
Other, net (1.1) (3.6)
------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4.3 87.4
Effect of exchange rate changes on cash and cash equivalents (0.9) 0.3
------- --------
Cash and cash equivalents:
Net change (8.7) (5.9)
Beginning balance 31.2 32.8
Net cash change due to change in year end of subsidiaries -- (8.2)
------- --------
Ending balance $ 22.5 $ 18.7
======= ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 8.9 $ 5.7
------- --------
Cash paid for income taxes $ 1.2 $ 0.7
======= ========
SUPPLEMENTAL NON-CASH ACTIVITIES:
Capital lease obligation for new assets $ 12.8 $ --
======= ========
</TABLE>
See accompanying notes
5
<PAGE> 7
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. GENERAL
Fresh Del Monte Produce Inc. (Fresh Del Monte) and its wholly owned subsidiary,
FDM Holdings Limited (FDM Holdings), were organized for the purpose of acquiring
beneficial ownership and control of all of the outstanding common stock of Fresh
Del Monte Produce N.V. (FDP N.V.) and Global Reefer Carriers, Ltd. (GRC)
pursuant to a Share Purchase Agreement dated as of December 19, 1996, among
Grupo Empresarial Agricola Mexicano, S.A. de C.V. (GEAM), Fresh Del Monte
Produce Inc. and FDM Holdings (the Share Purchase Agreement). Fresh Del Monte is
57.6% owned by IAT Group Inc., which is 100% beneficially owned by members of
the Abu-Ghazaleh family. In addition, members of the Abu-Ghazaleh family
directly own 9.3% of the outstanding ordinary shares of Fresh Del Monte. Fresh
Del Monte was incorporated under the laws of the Cayman Islands on August 29,
1996.
In the opinion of management, the accompanying unaudited consolidated financial
statements of Fresh Del Monte include all adjustments, consisting of normal
recurring adjustments, necessary to present fairly its financial position as of
March 31, 2000 and its operating results and cash flows for the period then
ended. Interim results are subject to significant seasonal variations and may
not be indicative of the results of operations that may be expected for the
entire 2000 fiscal year.
FOR ADDITIONAL INFORMATION, SEE FRESH DEL MONTE'S CONSOLIDATED FINANCIAL
STATEMENTS INCLUDED IN FRESH DEL MONTE'S ANNUAL REPORT ON FORM 20-F FOR THE YEAR
ENDED DECEMBER 31, 1999.
2. INVENTORIES
Inventories consisted of the following (U.S. dollars in millions):
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
<S> <C> <C>
Fresh produce $ 89.4 $ 57.9
Raw materials and packaging supplies 86.0 89.0
Growing crops 52.7 52.0
-------- -------
$228.1 $198.9
====== ======
</TABLE>
3. COMPREHENSIVE INCOME
Fresh Del Monte had comprehensive income of $37.7 million and $33.5 million for
the quarter ended March 31, 2000 and April 2, 1999, respectively. Comprehensive
income for the quarter ended March 31, 2000 consisted of net income, unrealized
foreign currency translation losses and unrealized loss on available-for-sale
equity securities. Comprehensive income for the quarter ended April 2, 1999
consisted of net income and unrealized foreign currency translation losses.
6
<PAGE> 8
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
4. CONTINGENCIES
Starting in December 1993, two of Fresh Del Monte's U.S. subsidiaries were named
among the defendants in a number of actions in courts in Texas, Louisiana,
Mississippi, Hawaii, Costa Rica and the Philippines involving allegations by
numerous foreign plaintiffs that they were injured as a result of exposure to a
nematocide containing the chemical dibromochloropropane (DBCP) during the period
1965 to 1990.
In December 1998, these subsidiaries entered into a settlement in the amount of
$4.6 million with counsel representing approximately 25,000 individuals. Of the
six principal defendants in these DBCP cases, Dow Chemical Company, Shell Oil
Company, Occidental Chemical Corporation and Chiquita Brands, Inc. have also
settled these claims. Under the terms of our settlement, approximately 22,000 of
these claimants dismissed their claims with prejudice and without payment. The
2,643 claimants who allege employment on a company-related farm in Costa Rica
and the Philippines and who demonstrated some injury were offered a share of the
settlement funds upon execution of a release. Over 98% of these claimants
accepted the terms of our settlement, the majority of which has been recovered
from our insurance carriers.
On February 16, 1999, two of Fresh Del Monte's U.S. subsidiaries were
purportedly served in the Philippines in an action entitled DAVAO BANANA
PLANTATION WORKERS' ASSOCIATION OF TIBURCIA, INC. V. SHELL OIL CO., ET AL. The
action is brought by a Banana Workers' Association purportedly on behalf of its
34,852 members for injuries they allege to have incurred as a result of DBCP
exposure. At this time, it is not known how many, if any, of the Association's
members are claiming against the Company's subsidiaries and whether these are
the same individuals who have already settled their claims against our
subsidiaries. The Company's subsidiaries moved to dismiss the action on
jurisdictional grounds, which motion was denied. The Company's subsidiaries have
moved for reconsideration of that decision, which remains pending.
Fresh Del Monte's U.S. subsidiaries have not settled the DBCP claims of
approximately 3,500 claimants represented by different counsel who filed actions
in Mississippi in 1996 and Hawaii in 1997. Each of those actions was dismissed
by a federal district court on grounds of FORUM NON CONVENIENS in favor of the
courts of the plaintiffs' home countries. In each case, the plaintiffs have
appealed the dismissal, which appeals remain pending.
On November 15, 1999, one of the Company's U.S. subsidiaries was served in two
actions entitled, GODOY RODRIGUEZ, ET AL. V. AMVAC CHEMICAL CORP., ET AL and
MARTINEZ PUERTO, ET AL. V. AMVAC CHEMICAL CORP., ET AL., in the 29th Judicial
District Court for the Parish of St. Charles, Louisiana. These actions were
removed to federal court, where they have been consolidated. These actions are
brought on behalf of claimants represented by the same counsel who filed the
Mississippi and Hawaii actions as well as a number of the claimants who have not
accepted our settlement offer. The Company's subsidiary has been given an
indefinite extension of time to respond to the complaints. At this time, it is
not known how many of the 2,962 GODOY RODRIGUEZ and MARTINEZ PUERTO plaintiffs
are claiming against the Company's subsidiary. At this time, it is premature to
evaluate the likelihood of a favorable or unfavorable outcome with respect to
any of the non-settled DBCP claims.
7
<PAGE> 9
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
4. CONTINGENCIES (CONTINUED)
On August 19, 1994, Chiquita International Limited ("Chiquita") filed suit in
Circuit Court in Dade County, Florida against FDP N.V. seeking injunctive relief
and damages of approximately $220 million for tortious interference and
conspiracy with respect to a contractual relationship with a Philippine
producer, Tagum Agricultural Development Company, Inc. ("Tadeco") and thereafter
amended its complaint to include two of Fresh Del Monte's subsidiaries as
defendants. On March 26, 1999, the court granted Fresh Del Monte's motion for
summary judgment. That order was affirmed by the Florida Third District Court of
Appeals on January 26, 2000. Chiquita appealed this decision to the Florida
Supreme Court. FDP N.V entered into a settlement agreement with Chiquita whereby
Chiquita agreed to dismiss its appeal to the Florida Supreme Court in exchange
for FDP N.V.'s agreement not to pursue its claim for attorney's fees against
Chiquita. Pursuant to that settlement agreement, the mandate of the Florida
Third District Court of Appeals was issued and the underlying action was
dismissed with prejudice by the Circuit Court on April 6, 2000.
On January 13, 1995 and at various times after that date, two of our U.S.
subsidiaries were served with a number of different actions filed in the Circuit
Court in Broward County, Florida by Ecuadorian shrimp farmers. The first group
of these actions allege that the named defendants (including
manufacturer-defendants Ciba-Geigy Ltd. and BASF Aktiengesellschaft and
distributor-defendant International Fertilizer Ltd.) had used or had caused to
be used agricultural chemicals in Ecuador that caused a substantial reduction in
the productivity of the plaintiffs' shrimp farms. The plaintiffs' demand was not
specified.
On November 13, 1997, the Broward County Circuit Court entered an order
dismissing the first group of actions on grounds of FORUM NON COVNENIENS in
favor of the courts of Ecuador. In February 1998, the plaintiffs in these
actions re-filed their claims in Ecuador. On February 1, 1999, the plaintiffs
filed a motion to reinstate their claims before the Florida court based upon the
allegation that their re-filed actions in Ecuador had been dismissed on
procedural grounds without reaching the merits of their claims. On September 24,
1999, the Broward County Circuit Court denied the plaintiffs' motion to reassert
jurisdiction. The plaintiffs did not appeal that decision.
On March 18, 1998, three of our subsidiaries were served with a new series of
complaints filed in Broward County, Florida by the same group of Ecuadorian
shrimp farmers. The new complaints named as defendants two of the Company's
subsidiaries, as well as, International Fertilizer Ltd. and
manufacturer-defendant E.I. DuPont de Nemours. The new complaints raised the
same allegations as the prior complaints, but alleged that the cause of the
damage to the plaintiffs' shrimp farms was the use of the chemical Benlate,
rather than the other fungicides alleged in the prior complaints. Following the
court's denial of the motion to reassert jurisdiction with respect to the first
group of actions, on October 12, 1999, the plaintiffs in the new series of
actions voluntarily dismissed (without prejudice) their claims against the
Company's subsidiaries.
8
<PAGE> 10
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
4. CONTINGENCIES (CONTINUED)
Thereafter, the plaintiffs proposed a settlement under which the Ecuadorian
shrimp farmers would dismiss their claims against our subsidiaries, Ciba-Geigy
Ltd. and BASF Aktiengesellschaft wherever filed. The parties are currently in
the process of executing settlement documents relinquishing all claims with
prejudice and terminating the litigations without cost or payment by us.
On October 20, 1997, Nordeste Investimentos e Participacoes S.A. (Nordeste) and
Directivos Agricola, S.A., an affiliate of Nordeste, agreed with a subsidiary of
Fresh Del Monte to submit to arbitration their disputes related to a Brazilian
joint venture entered into in 1993 that was terminated by that subsidiary in
August 1997. In the dispute, each party alleges that the other party breached
its contractual obligations under two separate joint venture agreements. Fresh
Del Monte's subsidiary seeks injunctive relief and $43.0 million in damages
while Nordeste seeks to recover damages of approximately $39.2 million. The
joint venture agreements contain a number of liquidated damage provisions that
form the basis for a substantial portion of each party's respective claims. The
arbitration took place in Rio de Janeiro, Brazil, from October 5, 1999 through
October 8, 1999. Each party provided post-hearing briefs and responsive papers
to the tribunal. The decision of the arbitration tribunal is expected by July
2000.
In June 1996, the Philippine Bureau of Internal Revenue ("BIR") filed a criminal
complaint against one of our subsidiaries alleging that it failed to pay certain
Philippine income and other taxes for 1994. The BIR filed suit notwithstanding a
ruling it made in November 1994 that the subsidiary was not subject to these
Philippine taxes. The complaint alleged that the amount in question, translated
into U.S. dollars as of March 31, 2000, was $19.0 million. On November 17, 1998,
the Philippine Department of Justice entered an order dismissing the complaint
without prejudice. The BIR's motion for reconsideration of the dismissal was
denied on June 15, 1999, thereby upholding the dismissal of the criminal
complaint.
Fresh Del Monte intends to vigorously defend itself in all of these matters. At
this time, management is not able to evaluate the likelihood of a favorable or
unfavorable outcome in any of the above-described matters. Accordingly,
management is not able to estimate the range or amount of loss, if any, on any
of the above-described matters and no accruals have been recorded as of March
31, 2000.
In 1980, elevated levels of certain chemicals were detected in the soil and
ground water at Fresh Del Monte's plantation in Hawaii (Kunia Well Site).
Shortly thereafter, Fresh Del Monte discontinued use of the Kunia Well site and
provided an alternate water source to area well users and commenced Fresh Del
Monte's own voluntary cleanup operation. In 1993, the Environmental Protection
Agency (EPA) identified the Kunia Well Site for potential listing on the
National Priorities List (NPL) under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended. On December 16, 1994, the
EPA issued a final rule adding the Kunia Well Site to the NPL. One of Fresh Del
Monte's subsidiaries entered into an order with the EPA for the Kunia Well Site
on September 28, 1995. Under the terms of the order, Fresh Del Monte's
subsidiary submitted a remedial investigation report in November 1998 for review
by the EPA. The remedial investigation report was approved by the EPA in
February 1999. A final draft feasibility study was submitted for EPA review in
December 1999, and Fresh Del Monte expects that the feasibility study will be
finalized by the third quarter of 2000.
9
<PAGE> 11
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
4. CONTINGENCIES (CONTINUED)
Based on the draft feasibility study submitted to the EPA in December 1999, the
estimated remediation costs associated with this matter are expected to be
between $4.2 million and $28.1 million, a portion of these estimates have been
discounted using a 5% interest rate. The undiscounted estimates are between
approximately $5.0 million and $30.0 million. An accrual of approximately $4.2
million is included in other noncurrent liabilities in the accompanying balance
sheets.
In addition to the foregoing, Fresh Del Monte is involved from time to time in
various claims and legal actions incident to Fresh Del Monte's 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 Fresh Del Monte.
5. EARNINGS PER SHARE
Basic and diluted per share income is calculated as follows (U.S. dollars in
millions, except per share data):
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------
MARCH 31, APRIL 2,
2000 1999
--------- ----------
<S> <C> <C>
NUMERATOR:
Net income $38.5 $35.4
---------- ----------
DENOMINATOR:
Denominator for basic earnings per share -
weighted average number of ordinary shares
outstanding 53,763,600 53,763,600
Effect of dilutive securities:
Employee stock options 3,131 160,797
Shares issuable in connection with an
acquisition -- 34,722
---------- ----------
Denominator for diluted earnings per share 53,766,731 53,959,119
========== ==========
Basic and diluted per share income: $ 0.72 $ 0.66
========== ==========
</TABLE>
10
<PAGE> 12
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
6. BUSINESS SEGMENT DATA
Fresh Del Monte evaluates performance based on several factors, of which net
sales and gross profit are the primary financial measures (U.S. dollars in
millions):
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
MARCH 31, 2000 APRIL 2, 1999
--------- ------------ --------- ------------
NET SALES GROSS PROFIT NET SALES GROSS PROFIT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Bananas $263.8 $32.6 $263.2 $23.4
Other fresh produce 243.7 38.0 205.3 41.1
Non-produce 28.6 0.7 24.9 0.4
-------- ------ ------- -------
Total $536.1 $71.3 $493.4 $64.9
====== ===== ====== =====
</TABLE>
7. SUBSEQUENT EVENT
On May 1, 2000, Fresh Del Monte amended its $450.0 million five-year revolving
credit facility to include a five-year term loan of $135.0 million. The term
loan has similar terms and conditions as the five-year revolving credit
facility, is payable in quarterly installments commencing on September 30, 2000
and bears interest based on a spread over the London interbank offered rate
(LIBOR). On May 10, 2000, Fresh Del Monte used the total proceeds from the
$135.0 million term loan to pay-down a portion of the outstanding balance of the
$450.0 million five-year revolving credit facility.
11
<PAGE> 13
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the first three months of 2000 was
$6.1 million compared with net cash used in operating activities of $21.3
million for the first three months of 1999. The increase in cash provided by
operating activities was primarily attributable to the changes in operating
assets and liabilities, principally due to an increase in accounts payable and
accrued expenses.
Working capital was $234.1 million at March 31, 2000 and $203.7 million at
December 31, 1999.
Net cash used in investing activities for the three months ended March 31, 2000
was $18.2 million compared with net cash used in investing activities of $72.3
million for the three months ended April 2, 1999. Net cash used in investing
activities for the first quarter of 2000 consisted primarily of capital
expenditures of $17.9 million. Net cash used in investing activities for the
first quarter of 1999 consisted primarily of the acquisition of Banana Marketing
Belgium (BMB), a Belgian banana marketing company, for $58.7 million and capital
expenditures of $14.1 million.
Net cash provided by financing activities for the three months ended March 31,
2000 was $4.3 million compared with net cash provided by financing activities of
$87.4 million for the three months ended April 2, 1999. Cash provided by
financing activities for first quarter of 2000 and 1999 primarily consisted of
net borrowings under Fresh Del Monte's $450.0 million five-year revolving credit
facility. For the first quarter of 2000, the net proceeds from long-term debt
were used primarily for operations. For the first quarter of 1999, the net
proceeds from long-term debt were used primarily to acquire BMB and for
operations.
At March 31, 2000, Fresh Del Monte had $480.9 million in committed working
capital facilities, of which $68.5 million was available. The major portion of
these facilities is represented by the $450.0 million revolving credit facility.
This revolving credit facility includes a swing line facility, a letter of
credit facility and a foreign exchange contract facility (see Recent
Developments). At March 31, 2000, $4.1 million of available credit was applied
towards the issuance of letters of credit. The revolving credit facility is
collateralized directly or indirectly by substantially all of Fresh Del Monte's
assets and expires on May 19, 2003. The revolving credit facility permits
borrowings with an interest rate based on a spread over the London interbank
offered rate (LIBOR). Outstanding borrowings at March 31, 2000 were $402.9
million, bearing interest at an average interest rate of 8.31%.
As of March 31, 2000, Fresh Del Monte had $518.4 million of long-term debt and
capital lease obligations, including the current portion, consisting of $402.9
million related to the revolving credit facility, $81.1 million of long-term
debt related to vessel loans, $11.1 million of other long-term debt and $23.3
million of capital lease obligations.
As of March 31, 2000, Fresh Del Monte had cash and cash equivalents of $22.5
million.
12
<PAGE> 14
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
FIRST QUARTER 2000 COMPARED WITH FIRST QUARTER 1999
NET SALES. Net sales for the first quarter of 2000 were $536.1 million compared
with $493.4 million for the first quarter of 1999. The increase in net sales of
$42.7 million was primarily a result of higher net sales in the other fresh
produce category. Net sales of other fresh produce increased primarily due to
higher volumes of pineapples, melons and deciduous fruit, partially offset by
lower per unit sale prices of melons. Banana net sales remained constant as
compared with the prior year due to lower sales volumes offset by increased per
unit sales prices.
COST OF PRODUCTS SOLD. Cost of products sold was $464.8 million for the first
quarter of 2000 compared with $428.5 million for the first quarter of 1999, an
increase of $36.3 million primarily attributable to the net increase in sales
volumes. Included in cost of products sold for the first quarter of 1999 was
approximately $4.2 million of increased costs due to the impact of Hurricane
Mitch on Fresh Del Monte's Guatemalan operations.
GROSS PROFIT. Gross profit was $71.3 million for the first quarter of 2000
compared with $64.9 million for the same period in 1999, an increase of $6.4
million, or 10%. As a percentage of net sales, gross profit increased from 13.2%
in the first quarter of 1999 to 13.3% in the first quarter of 2000.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $20.8 million in the first quarter of 2000 compared
with $17.4 million for the first quarter of 1999, an increase of $3.4 million.
The increase in selling, general and administrative expenses is principally due
to selling and marketing activities in connection with an increase in direct
selling activities in the European and Asia-Pacific regions and increased sales
volumes of other fresh produce.
OPERATING INCOME. Operating income for the first quarter of 2000 was $49.6
million compared with $47.1 million for the same period in 1999, an increase of
$2.5 million. The increase was principally due to the increase in gross profit,
partially offset by an increase in selling, general and administrative expenses.
INTEREST EXPENSE. Interest expense increased $2.5 million to $10.2 million for
the first quarter of 2000 compared with $7.7 million for the first quarter of
1999, principally as a result of higher borrowing levels from Fresh Del Monte's
$450.0 million revolving credit facility and higher effective interest rates.
PROVISION FOR INCOME TAXES. Provision from income taxes decreased from $4.9
million in the first quarter of 1999 to $1.1 million in the first quarter of
2000 primarily due to a decrease in taxable income in North America and Europe.
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FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RECENT DEVELOPMENTS
On May 1, 2000, Fresh Del Monte amended its $450.0 million five-year revolving
credit facility to include a five-year term loan of $135 million. The term loan
has similar terms and conditions as the five-year revolving credit facility, is
payable in quarterly installments commencing on September 30, 2000 and bears
interest based on a spread over LIBOR. On May 10, 2000, Fresh Del Monte used the
total proceeds from the $135.0 million term loan to pay-down a portion of the
outstanding balance of the $450.0 million five-year revolving credit facility.
The increased borrowing capacity will be used to fund Fresh Del Monte's
expansion plans and general corporate purposes.
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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 12, 2000 By: /s/ HANI EL-NAFFY
-----------------------------
Hani El-Naffy
President & Chief Operating Officer
By: /s/ JOHN F. INSERRA
-----------------------------
John F. Inserra
Executive Vice President &
Chief Financial Officer
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