<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 June 30, 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>
JUNE 30, DECEMBER 31,
2000 1999
---- ----
ASSETS UNAUDITED
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 11.9 $ 31.2
Trade accounts receivable, net of allowance of
$12.7 and $9.9, respectively 142.9 136.4
Advances to growers and other receivables, net of
allowance of $5.0 and $4.5, respectively 42.4 52.3
Inventories 188.4 198.9
Prepaid expenses and other current assets 10.4 13.4
----------- -----------
Total current assets 396.0 432.2
----------- -----------
Investments in unconsolidated companies 52.9 51.9
Property, plant and equipment, net 621.2 590.6
Other noncurrent assets 56.9 62.1
Goodwill, net of accumulated amortization of $7.6 and
$5.9, respectively 78.8 79.4
----------- ----------
Total assets $ 1,205.8 $ 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>
JUNE 30, DECEMBER 31,
2000 1999
---- ----
LIABILITIES AND SHAREHOLDERS' EQUITY UNAUDITED
<S> <C> <C>
Current liabilities:
Notes payable to banks $ 1.0 $ 3.2
Accounts payable and accrued expenses 181.9 195.2
Current portion of long-term debt and capital lease
obligations 28.2 24.9
Income taxes payable 7.2 5.2
---------- ----------
Total current liabilities 218.3 228.5
---------- ----------
Long-term debt 403.0 467.7
Capital lease obligations 16.7 8.3
Retirement benefits 56.2 53.9
Other noncurrent liabilities 10.3 8.7
Deferred income taxes 10.3 11.3
Minority interest 11.1 12.0
---------- ----------
Total liabilities 725.9 790.4
---------- ----------
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 162.8 107.1
Accumulated other comprehensive loss (10.5) (8.9)
---------- ----------
Total shareholders' equity 479.9 425.8
---------- ----------
Total liabilities and shareholders' equity $ 1,205.8 $ 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 SIX MONTHS ENDED
JUNE 30, JULY 2, JUNE 30, JULY 2,
2000 1999 2000 1999
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net sales $ 516.2 $ 476.2 $1,052.3 $ 969.6
Cost of products sold 467.9 422.0 932.7 850.5
------ ------ ------ ------
Gross profit 48.3 54.2 119.6 119.1
Selling, general and administrative
expenses 18.2 16.1 39.0 33.5
Amortization of goodwill 0.8 0.3 1.7 0.7
------ ------ ------ ------
Operating income 29.3 37.8 78.9 84.9
Interest expense 11.5 7.4 21.7 15.1
Interest income 0.5 0.7 1.3 1.4
Other income (loss), net (0.2) 6.2 (0.8) 6.4
------ ------ ------ ------
Income before provision for income taxes 18.1 37.3 57.7 77.6
Provision for income taxes 0.9 3.8 2.0 8.7
------ ------ ------ ------
Net income $ 17.2 $ 33.5 $ 55.7 $ 68.9
====== ====== ====== ======
Basic and diluted per share income $ 0.32 $ 0.62 $ 1.04 $ 1.28
====== ====== ====== ======
Weighted average number of ordinary
shares outstanding:
Basic 53,763,600 53,763,600 53,763,600 53,763,600
Diluted 53,763,600 53,803,444 53,765,166 53,881,281
</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>
SIX MONTHS ENDED
JUNE 30, JULY 2,
2000 1999
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 55.7 $ 68.9
Adjustments to reconcile net income to cash provided by
operating activities:
Goodwill amortization 1.7 0.7
Depreciation and amortization other than goodwill 26.0 21.8
Deferred credit vessel leases (2.9) (2.4)
Equity in earnings of unconsolidated companies, net of
dividends (2.4) (1.4)
Gain on insurance proceeds related to Hurricane Mitch -- (6.0)
Deferred income taxes (1.0) 1.8
Other, net 4.2 1.4
Changes in operating assets and liabilities:
Receivables 3.1 (12.8)
Inventories 9.0 (9.8)
Accounts payable and accrued expenses (9.8) (14.4)
Prepaid expenses and other current assets 3.0 16.8
Other noncurrent assets and liabilities 6.1 (2.7)
------ --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 92.7 61.9
------ --------
INVESTING ACTIVITIES:
Capital expenditures (38.1) (34.9)
Capital expenditures due to Hurricane Mitch, net of
insurance proceeds (3.3) (4.0)
Proceeds from sale of assets 3.3 --
Purchase of subsidiaries (3.9) (58.7)
Net investment in and advances to unconsolidated companies 0.4 (4.5)
Other investing activities, net 1.1 0.5
------ --------
NET CASH USED IN INVESTING ACTIVITIES (40.5) (101.6)
------ --------
</TABLE>
See accompanying notes
4
<PAGE> 6
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
UNAUDITED
(U.S. DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, JULY 2,
2000 1999
---- ----
<S> <C> <C>
FINANCING ACTIVITIES:
Proceeds from long-term debt $113.5 $139.3
Payments on long-term debt (179.3) (108.8)
Proceeds from short-term borrowings 2.0 4.8
Payments on short-term borrowings (4.2) --
Other, net (2.9) (5.1)
------- -------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (70.9) 30.2
------- -------
Effect of exchange rate changes on cash and cash equivalents (0.6) 1.6
------- -------
Cash and cash equivalents:
Net change (19.3) (7.9)
Beginning balance 31.2 32.8
Net cash change due to change in year end of subsidiaries -- (8.2)
------- -------
Ending balance $ 11.9 $ 16.7
====== =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 20.4 $ 15.5
====== =======
Cash paid for income taxes $ 2.3 $ 5.6
====== =======
SUPPLEMENTAL NON-CASH ACTIVITIES:
Capital lease obligations 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
June 30, 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 year 2000.
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>
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
<S> <C> <C>
Fresh produce $ 50.6 $ 57.9
Raw materials and packaging supplies 84.5 89.0
Growing crops 53.3 52.0
------- -------
$ 188.4 $ 198.9
======= =======
</TABLE>
3. COMPREHENSIVE INCOME
Fresh Del Monte had comprehensive income of $16.4 million and $31.9 million for
the quarter ended June 30, 2000 and July 2, 1999, respectively. For the six
months ended June 30, 2000 and July 2, 1999, comprehensive income was $54.1
million and $65.3 million, respectively. Comprehensive income consisted of net
income, unrealized foreign currency translation losses and unrealized loss on
available-for-sale equity securities.
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. The remaining claimants did not accept the
settlement proceeds and approximately $268,000 was returned to the Company's
subsidiaries.
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 Fresh Del Monte's subsidiaries and whether these
are the same individuals who have already settled their claims against our
subsidiaries. Fresh Del Monte's subsidiaries filed motions to dismiss and for
reconsideration on jurisdictional grounds, which were denied. Accordingly, Fresh
Del Monte's subsidiaries answered the complaint denying all of plaintiff's
allegations.
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 Fresh Del Monte'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 the settlement offer. Fresh Del Monte'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 Fresh Del Monte's subsidiary and 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 tortuous 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 FDP N.V.'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 alleged 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
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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 Fresh Del
Monte's subsidiaries.
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 June 30, 2000, was $18.0 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's subsidiaries intend to vigorously defend themselves 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 June 30, 2000, except for the DBCP settlement.
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 sought injunctive relief and $43.0 million in damages
while Nordeste sought 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. On
May 10, 2000, the arbitration tribunal issued an award requiring the Fresh Del
Monte's subsidiary to pay $2.0 million to Nordeste and that the Fresh Del
Monte's subsidiary and Nordeste exchange a 50% ownership they each have in two
companies that have no assets. Fresh Del Monte's subsidiary tendered payment of
the $2.0 million and proposed to have a closing to effect the transfer of the
shares of the two companies. However, Nordeste refused the tender and Fresh Del
Monte's subsidiary has been informed that Nordeste will seek to void AB INITIO
the arbitration award in the Brazilian courts.
In 1980, elevated levels of certain chemicals were detected in the soil and
ground water at one of Fresh Del Monte's subsidiary's plantation in Hawaii
(Kunia Well Site). Shortly thereafter, Fresh Del Monte's subsidiary discontinued
the use of the Kunia Well site and provided an alternate water source to area
well users and the subsidiary commenced its 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. On
9
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FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
4. CONTINGENCIES (CONTINUED)
September 28, 1995, Fresh Del Monte's subsidiary entered into an order (Order)
with the EPA to conduct the remedial investigation and the feasibility study of
the Kunia Well Site. 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 EPA approved the remedial investigation report in February 1999. A
final draft feasibility study was submitted for EPA review in December 1999, and
it is expected that the feasibility study will be finalized by the fourth
quarter of 2000.
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. Certain portions of these estimates have
been discounted using a 5% interest rate. The undiscounted estimates are between
$5.0 million and $30.0 million. An accrual of $4.2 million is included in other
noncurrent liabilities in the accompanying balance sheets.
In addition to the foregoing, Fresh Del Monte's subsidiaries are involved from
time to time in various claims and legal actions incident to their 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 SIX MONTHS ENDED
JUNE 30, JULY 2, JUNE 30, JULY 2,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
NUMERATOR:
Net income $ 17.2 $ 33.5 $ 55.7 $ 68.9
=========== ========== ========== ==========
DENOMINATOR:
Denominator for basic earnings per share-
weighted average number of ordinary
shares outstanding 53,763,600 53,763,600 53,763,600 53,763,600
Effect of dilutive securities:
Employee stock options -- 5,122 1,566 82,959
Shares issuable in connection with an
acquisition -- 34,722 -- 34,722
----------- ---------- ---------- ----------
Denominator for diluted earnings per share 53,763,600 53,803,444 53,765,166 53,881,281
=========== ========== ========== ==========
Basic and diluted per share income: $ 0.32 $ 0.62 $ 1.04 $ 1.28
=========== ========== ========== ==========
</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>
SIX MONTHS ENDED
JUNE 30, 2000 JULY 2, 1999
NET SALES GROSS PROFIT NET SALES GROSS PROFIT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Bananas $ 514.4 $ 43.3 $ 518.2 $ 29.6
Other fresh produce 485.1 79.6 404.6 90.3
Non-produce 52.8 (3.3) 46.8 (0.8)
-------- -------- ------- -------
Total $1,052.3 $ 119.6 $ 969.6 $ 119.1
======== ======== ======= =======
</TABLE>
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 six months of 2000 was
$92.7 million compared to $61.9 million for the first six months of 1999. The
increase in cash provided by operating activities was principally due to a
decrease in accounts receivable and inventories and an increase in accounts
payable and accrued expenses.
Working capital was $177.7 million at June 30, 2000 and $203.7 million at
December 31, 1999.
Net cash used in investing activities for the six month period ended June 30,
2000 was $40.5 million compared with $101.6 million for the six month period
ended July 2, 1999. Net cash used in investing activities for the first six
months of 2000 consisted primarily of capital expenditures of $38.1 million. Net
cash used in investing activities for the first six months 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 $34.9 million.
Net cash used in financing activities for the six month period ended June 30,
2000 was $70.9 million compared with net cash provided by financing activities
of $30.2 million for the six month period ended July 2, 1999. Cash used in
financing activities for first six months of 2000 primarily consisted of net
payments on Fresh Del Monte's $450.0 million five-year revolving credit
facility. Cash provided by financing activities for the first six months of 1999
primarily consisted of net borrowings from the $450.0 million five-year credit
facility which were used primarily to acquire BMB and for operations.
At June 30, 2000, Fresh Del Monte had $461.9 million in committed working
capital, of which $259.3 million was available. The major portion of these
facilities is represented by the $450.0 million revolving credit facility, which
includes a swing line facility, a letter of credit facility and a foreign
exchange contract facility. At June 30, 2000, $2.7 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 June 30, 2000 were
$197.9 million, bearing interest at an average interest rate of 8.89%.
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 giving Fresh
Del Monte a total borrowing capacity under this facility of $585.0 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 LIBOR (9.45% at June 30, 2000). 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 on 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.
12
<PAGE> 14
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
As of June 30, 2000, Fresh Del Monte had $447.9 million of long-term debt and
capital lease obligations, including the current portion, consisting of $197.9
million related to the revolving credit facility, $135.0 million related to the
five-year term loan, $78.6 million of long-term debt related to vessel loans,
$14.2 million of other long-term debt and $22.2 million of capital lease
obligations.
As of June 30, 2000, Fresh Del Monte had cash and cash equivalents of $11.9
million.
RESULTS OF OPERATIONS
SECOND QUARTER 2000 COMPARED WITH SECOND QUARTER 1999
NET SALES. Net sales for the second quarter of 2000 were $516.2 million compared
with $476.2 million for the second quarter of 1999. The increase in net sales of
$40.0 million was primarily attributed to the other fresh produce category which
increased primarily due to higher sales volumes of melons, pineapples and
deciduous fruit and higher per unit sale prices of pineapples, partially offset
by lower per unit sale prices of melons and deciduous fruit. Banana net sales
decreased by $4.4 million as compared with the prior year due to a planned
reduction in sales volumes partially offset by increased per unit sales prices.
Net sales were adversely affected by a weaker Euro, partially offset by the
favorable impact of a stronger Japanese Yen. The net effect of foreign exchange
in the second quarter of 2000 compared with the same period of 1999 was a
decrease of approximately $6.3 million in net sales.
COST OF PRODUCTS SOLD. Cost of products sold was $467.9 million for the second
quarter of 2000 compared with $422.0 million for the second quarter of 1999, an
increase of $45.9 million primarily attributable to the net increase in sales
volumes in the other fresh produce category and an increase in fuel and
linerboard costs of approximately $7.0 million. Included in cost of products
sold for the second quarter of 1999 were approximately $7.1 million of increased
costs due to the impact of Hurricane Mitch on Fresh Del Monte's Guatemalan
operations.
GROSS PROFIT. Gross profit was $48.3 million for the second quarter of 2000
compared with $54.2 million for the same period in 1999, a decrease of $5.9
million. As a percentage of net sales, gross profit decreased from 11.4% in the
second quarter of 1999 to 9.4% in the second quarter of 2000 primarily due to
the adverse effect of foreign exchange and increased fuel and linerboard costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $18.2 million in the second quarter of 2000
compared with $16.1 million for the second quarter of 1999, an increase of $2.1
million. The increase is principally due to higher selling and marketing
activities in connection with direct selling activities in the Asia-Pacific
region and increased sales volumes of other fresh produce.
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<PAGE> 15
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SECOND QUARTER 2000 COMPARED WITH SECOND QUARTER 1999 (CONTINUED)
OPERATING INCOME. Operating income for the second quarter of 2000 was $29.3
million compared with $37.8 million for the same period in 1999, a decrease of
$8.5 million due to the decrease in gross profit and the increase in selling,
general and administrative expenses.
INTEREST EXPENSE. Interest expense increased $4.1 million to $11.5 million for
the second quarter of 2000 compared with $7.4 million for the second quarter of
1999, as a result of higher effective interest rates and a higher average debt
balance.
OTHER INCOME (LOSS), NET. Other income (loss), net decreased by $6.4 million
from $6.2 million for the second quarter of 1999 to a loss of $0.2 million for
the second quarter of 2000. The decrease is due primarily to $2.5 million of
Hurricane Mitch insurance recoveries received in the second quarter of 1999 and
a decrease in equity earnings from unconsolidated subsidiaries.
PROVISION FOR INCOME TAXES. Provision for income taxes decreased from $3.8
million in the second quarter of 1999 to $0.9 million in the second quarter of
2000 primarily due to a decrease in taxable income in North America and Europe.
FIRST SIX MONTHS OF 2000 COMPARED WITH FIRST SIX MONTHS OF 1999
NET SALES. Net sales for the first six months of 2000 were $1,052.3 million
compared with $969.6 million for the first six months of 1999. The increase in
net sales of $82.7 million was primarily attributed to the other fresh produce
category which increased as a result of higher sales volumes of melons,
pineapples and deciduous fruit and higher per unit sale prices of pineapples,
partially offset by lower per unit sales prices of deciduous fruit and melons.
Banana net sales decreased by $3.8 million as compared with the prior year due
to a planned reduction in sales volumes partially offset by increased per unit
sales prices.
Net sales were adversely affected by a weaker Euro, partially offset by the
favorable impact of a stronger Japanese Yen. The net effect of foreign exchange
in the first six months of 2000 compared with the same period of 1999 was a
decrease of approximately $14.0 million in net sales.
COST OF PRODUCTS SOLD. Cost of products sold was $932.7 million for the first
six months of 2000 compared with $850.5 million for the first six months of
1999, an increase of $82.2 million. This increase is primarily attributable to
the net increase in sales volumes in the other fresh produce category and an
increase in fuel and linerboard costs of approximately $19.0 million. Included
in cost of products sold for the first six months of 1999 were approximately
$11.3 million of increased costs due to the impact of Hurricane Mitch on Fresh
Del Monte's Guatemalan operations.
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FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
FIRST SIX MONTHS OF 2000 COMPARED WITH FIRST SIX MONTHS OF 1999 (CONTINUED)
GROSS PROFIT. Gross profit was $119.6 million for the first six months of 2000
compared with $119.1 million for the same period in 1999. As a percentage of net
sales, gross profit decreased from 12.3% in the first six months of 1999 to
11.4% in the first six months of 2000 primarily due to the adverse effect of
foreign exchange and increased fuel and linerboard costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $5.5 million to $39.0 million in the first six
months of 2000 compared with $33.5 million for the first six months of 1999.
This increase is primarily attributable to a significant increase in direct
selling activities in the Asia-Pacific region and increased sales volumes of
other fresh produce.
OPERATING INCOME. Operating income for the first six months of 2000 was $78.9
million compared with $84.9 million for the same period in 1999. The decrease is
due primarily to the $5.5 million increase in selling, general and
administrative expenses.
INTEREST EXPENSE. Interest expense increased $6.6 million to $21.7 million for
the first six months of 2000 compared with $15.1 million for the first six
months of 1999, as a result of higher effective interest rates and a higher
average debt balance.
OTHER INCOME (LOSS), NET. Other income (loss), net decreased by $7.2 million
from $6.4 million for the first six months of 1999 to a loss of $0.8 million for
the first six months of 2000. The decrease is due primarily to $6.0 million of
Hurricane Mitch insurance recoveries received in the second quarter of 1999.
PROVISION FOR INCOME TAXES. Provision for income taxes decreased from $8.7
million for the first six months of 1999 to $2.0 million for the first six
months of 2000 primarily due to a decrease in taxable income in North America
and Europe.
15
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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: August 7, 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
16
