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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
[ ] Registration statement pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act of 1934 (NO FEE REQUIRED)
or
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 1999
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (NO FEE REQUIRED)
Commission file number: 1-14706
FRESH DEL MONTE PRODUCE INC.
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(Exact Name of Registrant as Specified in Its Charter)
The Cayman Islands
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(Jurisdiction of incorporation or organization)
c/o Del Monte Fresh Produce Company
800 Douglas Road, North Tower, 12th Floor, Coral Gables, FL 33134
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(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which registered
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Ordinary Shares, par value $0.01 per share New York Stock Exchange
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Securities registered or to be registered pursuant to Section 12(g) of
the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered by the
annual report.
53,763,600 Ordinary Shares
Indicate by check mark whether the registrant: (1) has filed all
reports required to 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 [X] No [ ]
Indicate by check mark which financial statement item the registrant
has elected to follow.
Item 17 [ ] Item 18 [X]
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TABLE OF CONTENTS
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PART I
Item 1. Description of Business.............................................................................1
Item 2. Description of Property............................................................................23
Item 3. Legal Proceedings..................................................................................23
Item 4. Control of Registrant..............................................................................26
Item 5. Nature of Trading Market...........................................................................27
Item 6. Exchange Controls and Other Limitations Affecting Security Holders.................................27
Item 7. Taxation...........................................................................................28
Item 8. Selected Financial Data............................................................................29
Item 9. Management's Discussion and Analysis of Financial Condition and Results of Operations..............31
Item 9A. Quantitative and Qualitative Disclosures About Market Risk.........................................40
Item 10. Directors and Officers of Registrant...............................................................43
Item 11. Compensation of Directors and Officers.............................................................46
Item 12. Options to Purchase Securities from Registrant or Subsidiaries.....................................46
Item 13. Interest of Management in Certain Transactions.....................................................47
PART II
Item 14. Description of Securities to be Registered.........................................................48
PART III
Item 15. Defaults Upon Senior Securities....................................................................48
Item 16. Changes in Securities, Changes in Security for Registered Securities and Use of Proceeds...........48
PART IV
Item 17. Financial Statements...............................................................................48
Item 18. Financial Statements...............................................................................48
Item 19. Financial Statements and Exhibits..................................................................49
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PART I
In this Report, references to "$" and "dollars" are to United States
dollars. Percentages and certain amounts contained herein have been rounded for
ease of presentation. Any discrepancies in any table between totals and the sums
of amounts listed are due to rounding. As used herein, references to years ended
1997 through 1999 are to fiscal years ended December 26, 1997, January 1, 1999
and December 31, 1999, respectively.
THIS REPORT, INFORMATION INCLUDED IN FUTURE FILINGS BY FRESH DEL MONTE
PRODUCE INC. AND INFORMATION CONTAINED IN WRITTEN MATERIAL, PRESS RELEASES AND
ORAL STATEMENTS ISSUED BY OR ON BEHALF OF US CONTAIN, OR MAY CONTAIN, STATEMENTS
THAT CONSTITUTE FORWARD-LOOKING STATEMENTS. THESE STATEMENTS APPEAR IN A NUMBER
OF PLACES IN THIS REPORT AND INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR
CURRENT EXPECTATIONS OF US OR OUR OFFICERS (INCLUDING STATEMENTS PRECEDED BY,
FOLLOWED BY OR THAT INCLUDE THE WORDS "BELIEVES", "EXPECTS", "ANTICIPATES" OR
SIMILAR EXPRESSIONS) WITH RESPECT TO VARIOUS MATTERS, INCLUDING WITHOUT
LIMITATION (i) OUR ANTICIPATED NEEDS FOR, AND THE AVAILABILITY OF, CASH, (ii)
OUR LIQUIDITY AND FINANCING PLANS, (iii) TRENDS AFFECTING OUR FINANCIAL
CONDITION OR RESULTS OF OPERATIONS, INCLUDING ANTICIPATED EXPENSE LEVELS, (iv)
OUR PLANS FOR EXPANSION OF OUR BUSINESS (INCLUDING THROUGH ACQUISITIONS) AND
COST SAVINGS, (v) THE IMPACT OF COMPETITION, AND (vi) THE RESOLUTION OF CERTAIN
LEGAL AND ENVIRONMENTAL PROCEEDINGS. 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 STATEMENT.
THE FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE
AND INVOLVE RISKS AND UNCERTAINTIES. IT IS IMPORTANT TO NOTE THAT OUR ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A
RESULT OF VARIOUS FACTORS. THE ACCOMPANYING INFORMATION CONTAINED IN THIS
REPORT, INCLUDING, WITHOUT LIMITATION, THE INFORMATION UNDER "DESCRIPTION OF
BUSINESS--RISK FACTORS" AND "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS," IDENTIFIES IMPORTANT FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING
STATEMENTS.
Our volume data for included in this Report has been obtained from our
records. Other than with respect to volume data for Fresh Del Monte Produce
Inc., which we refer to as Fresh Del Monte, the market share, volume and
consumption data contained in this Report have been compiled by us based upon
data and other information obtained from third party sources, primarily from the
Food and Agriculture Organization of the United Nations, which we refer to as
the FAO, and from our surveys of customers and other company-compiled data.
Volume data contained in this Report is shown in millions of 40 pound equivalent
boxes.
ITEM 1. DESCRIPTION OF BUSINESS
We are a world leader in the production, distribution and marketing of
fresh produce. Our products are marketed throughout the world under the DEL
MONTE(R) brand name which has been in existence since 1892 and is a widely
recognized symbol of product quality and reliability. Our major products are
bananas, pineapples, deciduous fruit and melons. The deciduous fruit we sell
includes primarily grapes, plums, nectarines, peaches, apricots and cherries;
and apples, pears and citrus. In 1999, we believe we were:
o the third largest marketer of bananas in the world, with an
estimated 19% market share;
o the largest marketer of fresh pineapples in the world, with an
estimated 54% market share; and
o the largest marketer of cantaloupes sold in the United States
in the November to May off-season.
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We control, manage or supervise all aspects of the production,
distribution and marketing of our fresh produce. We believe this enhances our
ability to ensure the quality of our products, operate efficiently and generate
high margins. Our products come primarily from 13 countries located in North and
South America, the Asia Pacific region and Africa. In 1999, 31% of the fresh
produce we sold was grown on farms owned or leased by us or by joint ventures in
which we participate and the remaining 69% was acquired through supply contracts
with independent growers. We transport our fresh produce to markets worldwide
using our globally managed fleet of 43 owned or chartered refrigerated vessels.
We also operate port, distribution and ripening facilities. By controlling
transportation and distribution, we are able to continuously monitor and
maintain the quality of our produce and ensure its timely distribution to our
customers around the world.
We market and distribute our products to retail chains, wholesalers,
independent distributors and marketing companies in more than 50 countries
around the world. In 1999, North America was our largest market, accounting for
48% of our total sales. Europe and the Asia Pacific region were our other major
markets, accounting for 34% and 16% of total sales. The scale of our fresh
produce transportation and distribution operations provides us with the
flexibility to take advantage of market opportunities as they arise. It also
enables us to rapidly introduce new products and to widely distribute those
products efficiently.
We have exclusive rights to use the DEL MONTE(R) brand name for fresh
fruit, fresh vegetables and other fresh produce on a royalty-free basis under a
worldwide, perpetual license from Del Monte Corporation, an unaffiliated company
that owns the DEL MONTE(R) trademark. Del Monte Corporation and several other
unaffiliated companies manufacture, distribute and sell under the DEL MONTE(R)
brand name canned or processed fruits, vegetables and other produce as well as
dried fruit, snacks and other products.
Our principal shareholders, the Abu-Ghazaleh family, have been involved
in the fresh produce business since the late 1950s and in December 1996 acquired
Fresh Del Monte Produce N.V., which we refer to as FDP, N.V., and Global Reefer
Carriers, Ltd., which we refer to as GRC. Since the acquisition of these
companies, which engaged in the fresh produce business using the DEL MONTE(R)
brand name, new executive management, together with existing financial and
operating management, have implemented a strategic plan to enhance our position
as a leading worldwide producer, distributor and marketer of fresh produce. As
part of the implementation of that plan, management has undertaken a
comprehensive review of nearly all aspects of our operations with the objective
of improving efficiency, reducing costs and improving margins. In addition, new
executive management has strengthened our financial position by effecting an
initial public offering of our ordinary shares in October 1997 and refinancing
existing high interest rate debt.
In September 1998, we combined the fresh produce business of IAT Group
Inc., a company owned by the Abu-Ghazaleh family, with the fresh produce
business conducted under the DEL MONTE(R) brand name. We refer to this
combination as the IAT transaction. During 1999, we completed several important
acquisitions. In January 1999, we acquired all of the outstanding shares of
Banana Marketing Belgium N.V., or BMB, a marketing company in Europe which
enabled us to expand direct sales in the Northern European market. Also during
1999, we acquired a distribution business in New Zealand and we acquired two
fresh-cut fruit businesses in North America which we expect will help us to
rapidly develop a national fresh-cut fruit and vegetable business. Through the
New Zealand acquisition, we established a new fresh produce sourcing program and
a new market for our produce. During 1999, we also entered into new markets in
South America.
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RISK FACTORS
OUR RESULTS OF OPERATIONS IN 1999 SUFFERED DUE TO THE DECLINE IN BANANA
SALES PRICES, AND WE COULD REALIZE LOSSES AND SUFFER LIQUIDITY PROBLEMS DUE TO
DECLINES IN SALES PRICES FOR PINEAPPLES AND OTHER FRESH PRODUCE.
In 1999, banana sales accounted for a significant portion of our total
net sales, and pineapple sales accounted for a significant portion of our total
gross profit. Bananas are an agricultural commodity and banana prices fluctuate
significantly as a result of supply and demand as well as seasonal and other
market factors. Sales prices for bananas declined significantly in 1999 in both
the North American and European markets and, as a result, we recorded gross
losses on sales of bananas. Sales prices for bananas, pineapples and other fresh
produce are difficult to predict, and it is possible that these sales prices
will decline, or will decline further, in the future. In recent years, there has
been increasing consolidation among leading grocery stores and other retail
chains, wholesalers and distributors and we believe it may have resulted in
increases in their purchases power which may have contributed to the downward
pressure on sales prices. In the event of a decline in fresh produce sales
prices we could realize significant losses, experience liquidity problems and
suffer a weakening in our financial condition. A significant portion of our
costs are fixed, so that fluctuations in the prices of fresh produce have an
immediate impact on our profitability. Import regulations such as those
currently in place in the European Union banana market can also significantly
affect market supply and demand conditions, contributing to sales price
fluctuations.
DUE TO THE FLUCTUATIONS IN THE SUPPLY OF AND DEMAND FOR FRESH PRODUCE,
OUR RESULTS OF OPERATIONS ARE HIGHLY SEASONAL, AND WE REALIZE MOST OF OUR NET
SALES AND GROSS PROFIT DURING THE FIRST TWO CALENDAR QUARTERS.
In part as a result of seasonal sales price fluctuations, we have
historically realized most of our net sales and a substantial majority of our
gross profit during the first two calendar quarters. The sales prices of any
fresh produce item fluctuate 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. For example, the production
of bananas is continuous throughout the year, but the demand for bananas varies
because of the availability of other fruit. As a result, banana prices are
seasonal and demand, and therefore sales prices, are generally higher during the
first six months of the calendar year. For pineapples, the demand in Europe and
the United States increases during holiday seasons, in part due to the inclusion
of pineapples in gift baskets. We make most of our sales of deciduous fruits
during the North American and European off-season from November to May. In the
melon market, the entry of many growers selling unbranded or regionally branded
melons during the peak North American melon growing season results in greater
supply, and therefore lower sales prices, from June to October.
CROP DISEASE OR SEVERE WEATHER COULD RESULT IN SUBSTANTIAL LOSSES AND
WEAKEN OUR FINANCIAL CONDITION.
Crop disease and severe weather conditions including floods, windstorms
and hurricanes may adversely affect our supply of one or more fresh produce
items, reduce our sales volumes and increase our unit production costs. Because
a significant portion of our costs are fixed and contracted in advance of each
operating year, volume declines due to production interruptions or other factors
could result in increases in unit production costs which could result in
substantial losses and weaken our financial condition. We have experienced crop
disease and severe weather conditions from time to time including a hurricane in
Guatemala in 1998, flooding in Costa Rica in 1996 and a significant outbreak of
Black Sigatoka disease at our Costa Rican banana farms during 1993 and 1994.
When crop disease or severe weather conditions
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occur and destroy crops planted on our farms, we lose our investment in those
crops, which increases our unit production costs and reduces our sales volumes.
This effect could continue into subsequent years.
WE MAY HAVE DIFFICULTY COMPETING IN THE HIGHLY COMPETITIVE FRESH
PRODUCE INDUSTRY.
The fresh produce business is highly competitive, in part because our
products are perishable. Competition in the sale of bananas, pineapples,
deciduous fruit, melons and other fresh fruit comes from competing producers of
those fruits as well as from other fresh produce items. The extent of
competition varies for each particular fresh produce item. In order to compete
successfully, we must be able to strategically source fresh produce of uniformly
high quality and sell and distribute it on a timely basis.
WE ARE SUBJECT TO SUBSTANTIAL LEGAL AND ENVIRONMENTAL RISKS THAT COULD
RESULT IN SIGNIFICANT CASH OUTLAYS.
We are involved in several significant legal and environmental matters
which, if not resolved in our favor, could require significant cash outlays and
could materially adversely affect our results of operations and financial
condition. For example, we are involved in several actions in U.S. and non-U.S.
courts involving allegations by numerous Latin American and Philippine
plaintiffs that they were injured during the 1970s and 1980s by exposure to a
nematocide containing the chemical Dibromochloropropane.
In addition, the United States Environmental Protection Agency, or the
EPA, has placed the Kunia Well Site at our plantation in Oahu, Hawaii on the
National Priorities List under the "Superfund" law, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980. Under an order
entered into with the EPA, we completed a remedial investigation and engaged in
a feasibility study to determine the extent of the environmental contamination.
The remedial investigation report was finalized on January 21, 1999 and approved
by the EPA in February 1999. The final draft feasibility study was submitted for
EPA review in December 1999, and we expect that the Feasibility Study will be
finalized by the third quarter of 2000. The ultimate outcome and any potential
costs associated with this matter is estimated to be between approximately $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). As of December 31, 1999, we recorded a
provision of approximately $4.2 million.
ENVIRONMENTAL AND OTHER REGULATION OF OUR BUSINESS COULD ADVERSELY
IMPACT US.
Our business depends on the use of fertilizers, pesticides and other
agricultural chemicals. The use and disposal of these chemicals in some
jurisdictions are subject to regulation by various agencies. A decision by a
regulatory agency to significantly restrict the use of a chemical that has
traditionally been used in the cultivation of one of our principal products
could have an adverse impact on us. For example, methyl bromide, a pesticide
used for fumigation of imported produce for which there is currently no known
substitute, is currently scheduled to be phased out in the United States by
2005. Also, under the Federal Insecticide, Fungicide and Rodenticide Act, the
Federal Food, Drug and Cosmetic Act and the Food Quality Protection Act of 1996,
the EPA is undertaking a series of regulatory actions relating to the evaluation
and use of pesticides in the food industry. These actions and future actions
regarding the availability and use of pesticides could have an adverse effect on
us. In addition, if a regulatory agency were to determine that we are not in
compliance with a regulation in that agency's jurisdiction, this could result in
substantial penalties and could also result in a ban on the sale of part or all
of our products in that jurisdiction.
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WE ARE EXPOSED TO POLITICAL, ECONOMIC AND OTHER RISKS FROM OPERATING A
MULTINATIONAL BUSINESS.
Our business is multinational and subject to the political, economic
and other risks that are inherent in operating in numerous countries. These
risks include those of adverse government regulation, including the imposition
of import and export duties and quotas, currency restrictions, expropriation and
potentially burdensome taxation in a variety of countries. For example, the
banana import regulations that took effect in 1993 have restricted our access to
the European Union banana market and increased the cost of doing business in the
European Union. We cannot predict whether, when or how the EU banana import
regime may change, but any change could materially adversely impact us. In
addition, the potential risks of operating a multinational business may be
greater in countries where our activities are a significant factor in the
country's economy, which is particularly true of our banana, pineapple and melon
operations in Costa Rica and our banana and melon operations in Guatemala.
Several Latin American countries in which we operate have established
"minimum" export prices for bananas that are used as the reference point in
banana purchase contracts from independent producers, thus limiting our ability
to negotiate lower purchase prices. These prices potentially affect our
international cash flows because they result in increased payments to
counterparties in the producing country, based on the minimum export prices
established.
We are also subject to a variety of government regulations in countries
where we market our products. The countries in which we market a material amount
of our products are the United States, the countries of the European Union,
Japan, China and South Korea. Examples of these regulations include:
o sanitary regulations;
o regulations governing pesticide use and residue levels; and
o regulations governing packaging and labeling.
If we fail to comply with applicable regulations, it could result in an
order barring the sale of part or all of a particular shipment of our products
or, in an extreme case, the sale of any of our products for a specified period.
Such a development could result in significant losses and could weaken our
financial condition.
WE ARE SUBJECT TO MATERIAL CURRENCY EXCHANGE RISKS BECAUSE OUR
OPERATIONS INVOLVE TRANSACTIONS DENOMINATED IN VARIOUS CURRENCIES.
Because we conduct operations in many areas of the world involving
transactions denominated in a variety of currencies, our results of operations
as expressed in dollars may be significantly affected by fluctuations in rates
of exchange between currencies. Although a substantial portion of our sales
revenues (41% in 1999) is received in currencies other than the dollar, we incur
a majority of our costs in dollars. We generally are unable to adjust our
non-dollar local currency sales prices to compensate for increases in the
exchange rate of the dollar against the relevant local currency. In addition,
there is normally a time lag between our incurrence of costs and collection of
the related sales proceeds. Accordingly, if the dollar appreciates relative to
the currencies in which we receive sales proceeds, our operating results
generally are negatively affected. Although we periodically enter into currency
forward contracts as a hedge against currency exposures, we may not enter into
these contracts during any particular period or these contracts may not fully
offset currency fluctuations. If we do not enter into currency forward contracts
or other hedging mechanisms, we will be exposed to additional material currency
exchange risks.
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INCREASED PRICES FOR FUEL OIL, PACKAGING MATERIALS OR SHORT-TERM
REFRIGERATED VESSEL CHARTERS COULD INCREASE OUR COSTS SIGNIFICANTLY.
The costs we incur in our shipping and packaging operations are
determined in large part by the prices of fuel oil and packaging materials,
including linerboard, plastic and resin. We may be adversely affected if
sufficient quantities of these materials are not available to us. Any
significant increase in the cost of these items could materially adversely
affect our results. During 1999, cost of fuel and linerboard increased as
compared to the prior year which resulted in a negative impact on our results of
operations. As a percentage of cost of sales, cost of fuel increased from 1% in
1998 to 2% in 1999 and cost of linerboard increased from 3% in 1998 to 4% in
1999. In addition, our shipping operations are subject to the volatility of the
short-term charter market because many of our refrigerated vessels are chartered
rather than owned. These charters are primarily short-term, typically for
periods of one to three years. As a result, a significant increase in short-term
charter rates would significantly adversely affect our results.
OUR ABILITY TO SUCCESSFULLY DISTRIBUTE FRESH PRODUCE IN EUROPE AND
JAPAN IS AT RISK DUE TO OUR DISTRIBUTION ARRANGEMENTS.
We distribute many of our products in Europe and Japan through
marketing companies or partnerships with whom we have profit-sharing
arrangements or who distribute our products on a commission basis. If any of
these arrangements were terminated it could significantly limit our ability to
distribute products in the affected regions.
In 1999, our net sales of DEL MONTE(R) branded and other fruit sold in
Northern Europe under a sales and purchase agreement with a partnership in which
we own a non-controlling majority interest totaled $109.8 million. The
partnership owns banana import licenses that permit us to distribute bananas in
this region. Due to disagreements between us and the partnership, in July 1997,
we informed the partnership that we intend to discontinue the sales agreement as
of December 31, 2002. If we are unable to resolve this dispute, we may have to
obtain additional banana import licenses to continue distributing the same
volume of bananas in Northern Europe. We may not be able to obtain additional
banana import licenses, and if we do, they may not be on favorable terms.
OUR ACQUISITION STRATEGY MAY NOT BE SUCCESSFUL.
We seek to achieve our growth strategy in part through making
acquisitions, which poses a number of risks. We may not be successful in
identifying appropriate acquisition candidates, consummating acquisitions on
satisfactory terms, integrating any newly acquired business with our current
operations or obtaining financing on favorable terms or at all. We may issue
ordinary shares, incur long- or short-term indebtedness, spend cash or use a
combination of these for all or part of the consideration paid in future
acquisitions. We also are currently subject to contractual limitations on our
ability to effect acquisitions under our revolving credit facility. While we
regularly evaluate various acquisition opportunities, we have no present
commitments or agreements with respect to any material acquisition.
ACTS OR OMISSIONS OF OTHER COMPANIES COULD ADVERSELY AFFECT THE VALUE
OF THE DEL MONTE(R) BRAND.
We depend on the DEL MONTE(R) brand name in marketing our fresh
produce. We share the DEL MONTE(R) brand name with unaffiliated companies that
manufacture, distribute and sell canned or processed fruits and vegetables,
dried fruit, snack and other products. Acts or omissions by these companies,
including an instance of food-borne contamination or disease, may adversely
affect the value of the DEL MONTE(R) brand name. We may be adversely affected by
an incident, whether it occurs in our products or a competitor's products.
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OUR SUBSTANTIAL INDEBTEDNESS COULD LIMIT OUR FINANCIAL AND OPERATING
FLEXIBILITY AND SUBJECT US TO OTHER RISKS.
At year-end 1999, our total debt, including current maturities and
capital lease obligations, was $504.1 million and our total debt to total
capitalization ratio was approximately 54%. This level of indebtedness could
have significant consequences because:
o a substantial portion of our net cash flow from operations
must be dedicated to debt service and will not be available
for other purposes;
o our ability to obtain additional debt financing in the future
for working capital, capital expenditures or acquisitions may
be limited either by financial considerations or due to
covenants in existing loan agreements; and
o our level of indebtedness may limit our flexibility in
reacting to changes in the industry and economic conditions
generally.
Our ability to service our indebtedness will depend on our future
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, some of which are beyond our control. If
we were unable to service our debt, we would be forced to pursue one or more
alternative strategies such as selling assets, restructuring or refinancing our
indebtedness or seeking additional equity capital, which might not be successful
and which could substantially dilute the ownership interest of existing
shareholders.
Our revolving credit agreement imposes operating and financial
restrictions on our activities. Our failure to comply with the obligations under
the revolving credit agreement, including maintenance of financial ratios, could
result in an event of default, which, if not cured or waived, would permit
acceleration of the indebtedness due under the facility.
OUR SUCCESS DEPENDS ON OUR SENIOR EXECUTIVES, THE LOSS OF WHOM COULD
DISRUPT OUR OPERATIONS.
Our ability to maintain our competitive position is dependent to a
large degree on the services of our senior management team. We may not be able
to retain our existing senior management personnel or to attract additional
qualified senior management personnel.
WE DO NOT EXPECT TO PAY DIVIDENDS AND BECAUSE WE ARE A HOLDING COMPANY,
WE MAY BE UNABLE TO PAY DIVIDENDS OR MEET OUR DEBT SERVICE OBLIGATIONS.
We have not declared or paid any cash or other dividends on our
ordinary shares since our initial public offering in October 1997, and we do not
expect to pay dividends for the foreseeable future. Furthermore, because we are
a holding company, our ability to pay dividends and to meet our debt service
obligations depends primarily on receiving sufficient funds from our
subsidiaries, including from borrowings under their credit facilities. It is
possible that countries in which one or more of our subsidiaries are located
could institute exchange controls which could prevent those subsidiaries from
remitting dividends or other payments to us.
WE ARE CONTROLLED BY OUR PRINCIPAL SHAREHOLDERS.
IAT Group Inc. and its current shareholders, six members of the
Abu-Ghazaleh family, are our principal shareholders and currently directly and
indirectly beneficially own approximately 67% of the outstanding ordinary
shares. Our chairman and chief executive officer, and two of our other
directors, are members of the Abu-Ghazaleh family. We expect our principal
shareholders to continue to use their majority interest in the ordinary shares
to direct our management, to effectively control the election of our
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entire board of directors, to determine substantially all other matters
requiring shareholder approval and to control Fresh Del Monte. The concentration
of beneficial ownership of Fresh Del Monte may have the effect of delaying,
deterring or preventing a change in control, may discourage bids for the
ordinary shares at a premium over their market price and may otherwise adversely
affect the market price of the ordinary shares.
A SUBSTANTIAL NUMBER OF OUR ORDINARY SHARES ARE AVAILABLE FOR SALE IN
THE PUBLIC MARKET AND SALES OF THOSE SHARES COULD ADVERSELY AFFECT OUR SHARE
PRICE.
Future sales of the ordinary shares by our principal shareholders, or
the perception that such sales could occur, could adversely affect prevailing
market prices for the ordinary shares. Of the 53,763,600 ordinary shares
outstanding, 35,993,600 ordinary shares are owned by the principal shareholders
and are "restricted securities." These "restricted" ordinary shares are
registrable upon demand by the principal shareholders and are eligible for sale
in the public market without registration under the Securities Act of 1933,
subject to compliance with the resale volume limitations and other restrictions
of Rule 144 under the Securities Act.
OUR ORGANIZATIONAL DOCUMENTS CONTAIN A VARIETY OF ANTI-TAKEOVER
PROVISIONS THAT COULD DELAY, DETER OR PREVENT A CHANGE IN CONTROL.
Various provisions of our organizational documents and Cayman Islands
law may delay, deter or prevent a change in control of Fresh Del Monte that is
not approved by our board of directors. These provisions include:
o a classified board of directors;
o a prohibition on shareholder action through written consents;
o a requirement that general meetings of shareholders be called
only by a majority of the board of directors or by the
Chairman of the board;
o advance notice requirements for shareholder proposals and
nominations;
o limitations on the ability of shareholders to amend, alter or
repeal our organizational documents; and o the authority of
the board of directors to issue preferred shares with such
terms as the board of directors may determine.
In addition, a change of control would constitute an event of default
under our revolving credit facility which would have a material adverse effect
on us. These provisions also could delay, deter or prevent a takeover attempt.
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PRODUCTS
The following table presents the countries from which we source our
primary products, and the percentage of total 1999 sales volume for each product
category by country. The table also presents the percentage of total 1999 sales
volume of each product category that is sourced from farms owned or leased by us
or by joint ventures in which we participate and the percentage that is
purchased by us from independent growers.
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Percentage of Total 1999 Volume Sourced
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Deciduous Fruit
Source Bananas Pineapples and Citrus Melons
------ -------- -------- --------------- --------
<S> <C> <C> <C> <C>
CENTRAL AMERICA:
Costa Rica ................ 38% 67% -- 34%
Guatemala ................. 5 -- -- 17
Panama .................... 3 -- -- --
ASIA PACIFIC:
Philippines ............... 20 13 -- --
SOUTH AMERICA:
Chile .................... -- -- 58% --
Ecuador .................. 13 -- -- --
Uruguay .................. -- -- 11 --
Colombia ................. 16 -- -- --
Brazil ................... -- -- -- 3
NORTH AMERICA:
United States ............ -- 20 14 38
Mexico ................... 1 -- 1 5
AFRICA:
South Africa .............. -- -- 8 --
Cameroon .................. 4 -- -- --
OTHER ............................. -- -- 8 3
-------- -------- -------- --------
TOTAL ............. 100% 100% 100% 100%
======== ======== ======== ========
From company-owned or leased
farms and joint ventures....... 19% 76% 26% 66%
Purchased from independent
growers ....................... 81 24 74 34
-------- -------- -------- --------
TOTAL ............. 100% 100% 100% 100%
======== ======== ======== ========
</TABLE>
BANANAS
Bananas are the leading internationally traded fresh fruit in terms of
both volume and dollar sales. Based on the most recently available FAO data,
Europe is the world's largest market for bananas, importing approximately 13
billion pounds per year. North America is the next largest market for bananas,
importing over nine billion pounds annually. The Asia Pacific region, including
the Middle East, currently imports approximately five billion pounds per year.
According to the most recently available FAO data, during the period from 1990
to 1998, the volume of banana imports increased by approximately 26% in North
America, by approximately 55% in Europe, including Eastern Europe, and by
approximately 78% in the Asia Pacific region, including the Middle East. Bananas
are the largest volume fresh fruit and the second largest volume fresh produce
item, behind potatoes, sold in U.S. grocery stores. According to an independent
consumer survey conducted by FRESH TRENDS 1999, an industry publication, bananas
are the leading fruit purchased at least once a week. Approximately 65% of
shoppers in the United States who
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<PAGE> 12
purchase bananas buy them once a week. Our research indicates that persons aged
55 years and over, the fastest growing population segment in the United States,
consume nearly twice as many bananas as the average person.
We sold 113 million boxes of bananas in 1999 compared to 102 million
boxes in 1998, primarily due to increased purchases from independent growers,
primarily from Colombia, and improved yields in certain of our banana
operations.
OTHER FRESH FRUIT AND VEGETABLES
PINEAPPLES
Based upon the most recently available FAO data, annual fresh pineapple
consumption in the United States and Canada in 1998 was approximately 614
million pounds. In 1998, fresh pineapple imports into Europe were approximately
898 million pounds and imports into the Asia Pacific region, including the
Middle East, were approximately 325 million pounds. During the period from 1990
to 1998, the volume of imports of fresh pineapple increased by approximately
112% in North America, by approximately 42% in Europe, including Eastern Europe,
and decreased by approximately 4% in the Asia Pacific region, including the
Middle East.
Since the introduction in 1996 of our premier product, the "DEL MONTE
GOLD(R) EXTRA SWEET" pineapple, our share of the worldwide pineapple market has
grown significantly, to an estimated 54% in 1999. In addition, largely as a
result of our introduction and expansion of the "DEL MONTE GOLD(R) EXTRA SWEET"
pineapple, we increased our aggregate pineapple sales volume from 12 million
boxes in 1996 to 20 million boxes in 1999. The "DEL MONTE GOLD(R) EXTRA SWEET"
pineapple, which continues to command a premium price over other varieties and
since its introduction has achieved higher gross margins than traditional
pineapple, is a hybrid variety currently grown in Costa Rica and the
Philippines. It has a number of highly desirable characteristics such as
enhanced taste, golden shell color, bright yellow flesh and a higher vitamin C
content as compared to traditional varieties of pineapple.
DECIDUOUS FRUIT
Deciduous fruit grow on trees, bushes or vines that shed their leaves
seasonally. We produce, distribute and market a variety of deciduous fruit,
primarily consisting of grapes and stonefruit; apples, pears and citrus. The
stonefruit we sell includes primarily plums, nectarines and peaches. We believe
that grapes, in particular those marketed in the off-season, represent a
significant growth opportunity for us. According to FRESH TRENDS 1999, 93% of
U.S. consumers purchased green seedless grapes in 1998 and 88% of U.S. consumers
purchased red seedless grapes during the year.
In 1999, we sold nine million boxes of deciduous fruit including two
million boxes of apples, three million boxes of grapes, one million boxes of
stonefruit and two million boxes of citrus. In 1998, we sold nine million boxes
of deciduous fruit.
MELONS
Demand for melons in the United States and Europe is growing. Based on
the most recently available FAO data, during the period from 1990 to 1998 the
volume of imports of cantaloupes and other melons increased by approximately 85%
in North America and by approximately 113% in Europe. According to FRESH TRENDS
1999, cantaloupe is the third most frequently purchased fruit in the United
States, after bananas and apples.
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<PAGE> 13
We currently sell a variety of melons including cantaloupe, honeydew
and other melons. We have introduced new varieties of melons in order to meet
the different tastes and expectations of consumers in various markets. We have
become a significant producer and distributor of cantaloupe, honeydew and other
melons, including in the off-season. In 1999, we were the largest marketer in
the United States of cantaloupe sold in the November to May off-season with an
estimated 24% market share.
In 1999, we sold over 13 million boxes of melons, compared to ten
million boxes in 1998. The 1999 sales included ten million boxes of cantaloupes
and two million boxes of honeydews. We sold approximately 88% of our total melon
volume in North America with the balance sold in the off-season in Europe.
OTHER
We also produce, market and distribute other fresh produce including
plantains, Vidalia(R) and other sweet onions, tomatoes, specialty vegetables and
a variety of dried fruits and vegetables. In 1999 we sold two million boxes of
plantains principally under the DEL MONTE(R) brand name, and we plan to continue
increasing our sales of this fruit, which we purchase from independent growers.
In addition, in 1999, we sold two million boxes of sweet onions, tomatoes and
specialty vegetables. We began growing sweet onions outside the United States in
1998, and we also purchased a Vidalia(R) sweet onion farm and distribution
facility in Georgia. Although sweet onions are grown throughout the United
States, a sweet onion may only be labeled a Vidalia(R) onion if it is grown in
certain counties in the State of Georgia. According to FRESH TRENDS 1999,
although the consumption of onions generally has remained constant, the
consumption of sweet onions is growing. We grow, dry, market and sell a variety
of unbranded dried fruits and vegetables including pineapples, apples, raisins,
prunes, tomatoes and peppers. We sell these products to be used in bulk by food
distributors and manufacturers worldwide. These dried products are not sold
under the DEL MONTE(R) brand name.
During 1999, we acquired two fresh-cut fruit businesses in North
America which we expect will help us to rapidly develop a national fresh-cut
fruit and vegetable business. These acquisitions demonstrate our on-going
initiative of diversification. The fresh-cut produce business provides us with
an opportunity to further leverage our distribution network and bring
value-added products to the market. The market for the fresh-cut fruit and
vegetable category was $9.5 billion in 1998 and is expected to more than double
by 2005, according to the INTERNATIONAL FRESH-CUT PRODUCE ASSOCIATION.
SOURCING AND PLANTATION OPERATIONS
We source our products from 13 countries in North and South America,
the Asia Pacific region and Africa. In 1999, 31% of the fresh produce we sold
was grown on farms that are owned or leased by us or by joint ventures in which
we participate and the remaining 69% was acquired through supply contracts with
independent growers. We seek to maintain long-term contracts with most of our
independent growers in order to maintain a stable source of supply.
BANANAS
Bananas are grown in hot and humid climates, typically within 15
degrees north or south of the equator. Bananas are vulnerable to both adverse
localized weather conditions, such as windstorms or floods, and to plant
disease. For example, in 1998, our Guatemalan banana operations were damaged as
a result of Hurricane Mitch. The hurricane damage reduced our Guatemalan banana
production by approximately six million and two million boxes in 1999 and 1998,
respectively, or approximately 5% and 2%, respectively, of our 1999 and 1998
worldwide banana production.
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<PAGE> 14
In Latin America we produce bananas on company-owned farms in Costa
Rica and Guatemala and purchase bananas from independent growers in Costa Rica,
Ecuador, Guatemala, Colombia, Mexico and Panama, primarily pursuant to long-term
contracts.
On January 14, 1999, we purchased BMB, a Belgian banana marketing
company, for approximately $58.7 million, and executed a long-term banana
purchase agreement with a major producer of bananas in Colombia. We believe that
this investment allowed us to increase our banana sales volume and other fresh
produce sales volume in Europe and North America.
Due in part to limitations in the Philippines on foreign ownership of
land, we purchase bananas in the Philippines through long-term contracts with
independent growers. Under these contracts we have the right and the obligation
to purchase all bananas produced by the independent grower that meet our quality
specifications. Approximately half of all of our Philippine-sourced bananas are
supplied by one major Philippine grower which also supplies us with pineapples
through a joint venture relationship.
Our banana production in Cameroon is conducted pursuant to a 1987
arrangement between one of our subsidiaries and the Cameroon Development
Corporation, an organization wholly-owned by the government of Cameroon. Under
this agreement, we provide financial, management and technical support to
develop and cultivate banana plantations owned by the Cameroon Development
Corporation. We have the right of first refusal should the banana operations be
sold by the government of Cameroon.
PINEAPPLES
Pineapples are grown in tropical locations similar to those in which
bananas are grown, but pineapple growing requires greater capital resources,
significant agricultural expertise and intensive cultivation. As a result, a
higher percentage of the pineapples we sell are produced on company-owned or
leased farms, as compared with the bananas we sell.
The principal production and procurement areas for our pineapples are
Costa Rica, Hawaii and the Philippines. We own and operate a pineapple
plantation in Costa Rica, which provided approximately eleven million of the
total of fourteen million boxes of pineapple sourced from Costa Rica in 1999. In
Hawaii, we operate a pineapple plantation on leased land on the island of Oahu.
Most of this plantation is situated on land held under long-term leases which
run through 2008, while approximately 2,000 acres of the plantation is currently
leased on a month-to-month basis pending resolution of the environmental issues
relating to the Kunia Well site. As part of our joint venture arrangement in the
Philippines, we have a pineapple production and purchase agreement expiring in
the year 2013 that provides us with all of the joint venture's pineapple
production that meets our quality specifications. In the Philippines we also
have a long-term pineapple supply and profit-sharing agreement, under which we
are assured a minimum annual volume of pineapples.
DECIDUOUS FRUIT
We obtain our supply of deciduous fruit from company-owned plantations
in Chile and the United States and from purchases from independent growers in
Chile, the United States and South Africa. In Chile, we purchase fruit from
independent growers and also produce a variety of deciduous fruit on more than
6,000 acres of company-owned or leased land. Grapes that are harvested from
Chile for the pre-Christmas season in North America typically command a premium
price because of the limited supply at that time of the year. In the United
States, the majority of our fruit is sourced from California. In South Africa,
we source most of our deciduous fruit from the Capetown area under annual
contracts with independent growers.
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<PAGE> 15
MELONS
We are able to provide our customers with a year-round supply of melons
by sourcing them from Costa Rica, Guatemala, Mexico, Arizona and California. We
have developed specialized melon-growing technology which we estimate has
significantly increased our crop yield. Melon crop yields are highly dependent
on favorable weather conditions, particularly in the case of cantaloupes, which
are highly susceptible to adverse weather conditions. In addition, melon
production requires annual crop rotation and irrigation. For these reasons, we
have chosen primarily to lease rather than to own melon farms, with the
exception of a melon farm owned by one of our joint venture partners in Costa
Rica.
OTHER
We source the other products that we sell from a variety of locations
worldwide.
QUALITY
In order to ensure the consistently high quality of our products, we
have a quality assurance group that maintains detailed quality specifications
for our products. Our specifications require extensive sampling of our fresh
produce at all stages of the production and distribution process to ensure high
quality and proper sizing as well as to identify the primary sources of any
defects. Our fresh produce is evaluated based on both external appearance and
internal quality, using size, color, porosity, translucence and sweetness
criteria. Only fresh produce meeting our stringent quality specifications is
sold under the DEL MONTE(R) brand name.
We are able to maintain the high quality of our products by growing our
own produce and working closely with our joint venture partners and independent
growers. We insist that all produce supplied by our independent growers meet the
same stringent quality requirements as produce grown on our own farms.
Accordingly, we monitor our independent growers to ensure that their produce
will meet agricultural and quality control standards, we offer technical
assistance on certain aspects of production and packing and, in some cases, we
manage the farms.
In December 1998, our Costa Rican fresh pineapple and banana operations
received certificates of compliance to the International Standards Organization,
or ISO, 14001 standards. In April 1999, our Guatemalan banana operation also
received the ISO 14001 certification. These certifications demonstrate that our
Costa Rican banana and fresh pineapple operations and our Guatemalan banana
operations conform to internationally recognized standards for environmental
management systems. In light of increasing concerns about the environmental
impact of agricultural practices, particularly among European consumers, we
believe that our environmental management efforts may become increasingly
important in marketing our products. We are seeking to achieve certificates to
the ISO 14001 and/or ISO 9000 standards in our other major worldwide production
operations.
PACKING FACILITIES
We have extensive packing facilities in locations around the world
where we receive and pack for shipment fresh produce grown on our plantations
and received from joint venture partners and independent growers. At our banana
and pineapple sourcing locations, we have packing operations where we prepare
harvested fruit for shipment. At locations where we grow or purchase deciduous
fruit and melons, most of our packing stations include cold storage facilities,
controlled atmosphere rooms and multi-purpose packing lines designed to handle a
variety of products. The quality assurance process that begins on our
plantations and those of our joint venture partners and independent growers
continues as harvested products enter our
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<PAGE> 16
packing facilities. Where appropriate, we cool the fresh produce at our packing
facilities to maximize quality and shelf life.
SHIPPING AND DISTRIBUTION
In order to maintain the product quality and freshness required to
remain competitive and meet customers' expectations, it is critical that we
successfully manage the logistics of distributing fresh produce in a timely
manner to appropriate markets. In addition, we strive to preserve our fruit by
creating a continuous cold chain, beginning with the harvest of the fruit in the
field through its distribution to our end markets. Maintaining fruit at the
appropriate temperature is an important factor in preventing deterioration of
the fruit and maximizing potential shelf life. For example, bananas must be
refrigerated within 36 hours of the time of harvest and carefully maintained in
this state until delivery to the customer in order to ensure quality and
freshness. Even more stringent refrigeration requirements apply to the
transportation of pineapples, melons and deciduous fruit. As a result of these
requirements, we operate a broad range of shipping and distribution facilities
including refrigerated vessels, port facilities, trucks and warehouses.
We conduct shipping operations on a global basis to support our fresh
produce business, transporting our products from the countries in which they are
grown to the countries in which they are sold. We devote substantial resources
to managing the scheduling and availability of reliable ocean transportation. In
doing so, we seek to maximize the flexibility of our shipping operations to
permit us both to deliver our products on a timely basis to our customers, and
also to enhance our ability to respond quickly to changes in the global fresh
produce market by redeploying shipments to meet demand.
As of December 31, 1999, 13 out of the total of 26 vessels we chartered
were chartered on a short-term basis, and accordingly our shipping operations
are generally subject to the volatility of the short-term vessel charter market.
Both the supply of and demand for refrigerated vessels fluctuate over time,
causing corresponding fluctuations in short-term charter rates that can be
significant and that directly affect our overall transportation costs and
results of operations. The majority of our worldwide pineapple and deciduous
fruit production and all of our banana and melon production are shipped by
refrigerated vessels. In addition, we air freight the majority of our Hawaiian
pineapple production to customers in mainland United States. In 1999, we air
freighted two million boxes to those customers. We have been able to use our
existing refrigerated vessel fleet to ship melons from Costa Rica and Guatemala,
which has significantly reduced our per-box costs and improved our margins. We
also have developed a controlled modified atmosphere package for use in shipping
melons, which allows us to harvest the fruit when it is at a more advanced stage
of ripeness, resulting in improved melon taste without reducing shelf life.
As of the end of the first quarter of 2000, we operated 18 cold storage
and distribution facilities located throughout the United States and Europe,
many of which have ripening facilities. The cold storage facilities allow
palletized fruit to be stored in a temperature-controlled environment. Our
cold-storage capability helps to improve pricing by reducing pressure to fully
sell a shipment prior to its arrival at the port and improves ship utilization
by minimizing their waiting time at ports.
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<PAGE> 17
SALES AND MARKETING
We market our fresh produce in over 50 countries around the world. The
following tables present for each of the periods indicated (1) the percentage of
our total net sales by geographic region and (2) the percentage of our total net
sales by product category:
<TABLE>
<CAPTION>
Year Ended
-------------------------------------------------------
December 26, 1997 January 1, 1999 December 31, 1999
----------------- --------------- -----------------
<S> <C> <C> <C>
NET SALES BY GEOGRAPHIC REGION:
North America ....................... 49% 49% 48%
Europe .............................. 29 32 34
Asia Pacific ........................ 16 15 16
Other ............................... 6 4 2
---------- --------- ---------
Total ............................. 100% 100% 100%
========== ========= =========
NET SALES BY PRODUCT CATEGORY:
Bananas ............................. 57% 56% 55%
Other fresh fruit and vegetables .... 37 40 40
Non-Produce ......................... 6 4 5
---------- --------- ---------
Total ............................. 100% 100% 100%
========== ========= =========
</TABLE>
Our customers primarily consist of retail chains, wholesalers and
distributors. As part of our effort to maintain and enhance the value of the DEL
MONTE(R) brand name and strengthen customer loyalty, we, directly or in
conjunction with our marketing associates and distributors, provide value-added
services for our customers. These services include technical training relating
to the handling of fresh produce, merchandising, joint promotional activities,
market research, ripening services and logistical support. Since our customers
generally carry only one brand of each fresh produce item, we focus our
marketing and promotional efforts on trade advertising and in-store promotions.
NORTH AMERICA
Sales and distribution of our products in North America are conducted
by a sales force with offices throughout the United States and Canada. This
sales force sells directly to customers in North America, comprised principally
of leading grocery stores and other retail chains, wholesalers and distributors.
In recent years, our customer base has been consolidating and the sales force
has focused on supplying large-scale customers.
In the United States, because produce department margins are among the
highest of all major departments in grocery stores and because of strong demand
for fresh produce, many retailers have responded by using new grocery store
formats that allot more shelf space to fresh produce and/or place it in a prime
location within their stores.
We typically sell our bananas at a price that includes delivery to the
port of entry. At the port of entry, the fruit, which has been harvested while
still unripe or green, is transported in refrigerated trucks to processing
warehouses where the bananas are ripened, which generally takes four to eight
days. Bananas ripened by distributors or service wholesalers are then sold to
retailers, while bananas ripened by chain store ripening rooms are distributed
directly to their company-owned food stores. To meet customer needs, we offer a
proprietary banana ripening service from our distribution centers. We also
provide other services, such as store delivery, from our distribution locations.
In contrast to bananas and nearly all deciduous fruit, pineapples and melons are
ripe at the time of harvest, which requires the fruit to be delivered and sold
in a shorter time period but does not require any further dependence on ripeners
and ripening schedules.
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<PAGE> 18
EUROPE
The consumption of fresh produce has increased in Europe, aided by
greater year-round availability of certain fruits and vegetables from other
sources such as Chile and South Africa and by new technologies such as
controlled atmosphere storage. However, the EU has imposed regulations that have
reduced the supply of bananas in the EU and slowed EU banana market growth. See
"Description of Business--Government Regulation--European Union Banana Import
Regulations." In the United Kingdom, our products are distributed in much the
same manner as in North America, through direct sales to leading retail chains
and to wholesalers and distributors. Our products are distributed in Northern
and Southern Europe through two marketing companies with whom we share, in an
agreed ratio, the profits or losses realized from sales to customers. The
Northern European marketing company is a partnership in which we own a
non-controlling 80% equity interest. We gave notice of our intent to discontinue
our profit-sharing agreement with this partnership, but we are in ongoing
discussions with the partnership to resolve certain disagreements. See "Risk
Factors--Our ability to successfully distribute fresh produce in Europe and
Japan is at risk due to our distribution arrangements."
During 1999, we acquired all of the outstanding shares of BMB a
marketing company in Europe which enabled us to expand our direct sales in the
Northern European market.
ASIA PACIFIC
Since 1975, our bananas and pineapples have been distributed in Japan
through Japan's largest fresh produce distribution cooperative, which
distributes our products on a sales commission basis. In 1996, we commenced
direct marketing of fresh produce in Japan and in 1999, 40% of our sales volume
in Japan was attributable to our direct marketing efforts. We have also
commenced direct sales and marketing activities in Hong Kong and Korea. In other
Asia Pacific markets, including China, Pacific Russia, Okinawa, Singapore and
Taiwan, we currently sell to local distributors.
COMPETITION
Fresh produce marketing is highly competitive, and the effect of
competition is intensified because our products are perishable. Competition in
the sale of bananas, pineapples, deciduous fruit and melons comes from competing
producers of those fruits as well as other fresh produce items, most of which
are seasonal in nature. In order to compete successfully and capitalize on our
extensive brand awareness, we must be able to strategically source fresh produce
of uniformly high quality and sell and distribute it on a timely basis.
The extent of competition varies for each particular fresh produce
line. In the banana market, we face competition from a limited number of
multinational companies, the two largest of which are Dole Food Company and
Chiquita Brands International, Inc. At times, particularly when demand is
greater than supply, smaller companies also become a competitive factor. We
believe that we are the third largest marketer of bananas in the world and that
in 1999 our bananas constituted approximately 19% of the worldwide banana
market.
In the fresh pineapple market, the significant investment, logistics
and transportation requirements and the significant agricultural expertise
required to grow pineapples commercially deters new competitors from entering
the fresh pineapple business. As a result, there traditionally have been
relatively few fresh pineapple market participants other than us and our
principal competitor, Dole Food Company. There tends to be less price
fluctuation in the fresh pineapple business as compared with the banana business
because of a better balance in the market between supply and demand. This
happens in part because from the consumer's perspective, fewer comparable fruit
substitutes for fresh pineapples exist.
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<PAGE> 19
Competition in the sale of melons comes from marketers of both branded
melons and unbranded melons. From June to October, the peak North American
melon-growing season, many growers enter the market with less expensive
unbranded or regionally branded melons due to the relative ease of growing
melons, the short growth cycle and reduced transportation costs resulting from
the proximity of the melon farms to the markets. These factors permit many
smaller domestic growers to enter the market with unbranded or regionally
branded melons. As there are comparatively fewer melons available during
November to May, the U.S. off-season, we concentrate on selling our melons
during this off-season. In 1999, we were the largest marketer of cantaloupes
sold in the United States in the off-season, November to May.
EMPLOYEES AND LABOR RELATIONS
At year-end 1999, we employed a total of approximately 20,000 persons
worldwide, substantially all of whom are year-round employees. Approximately
19,000 of these persons are employed in production locations and approximately
12,000 are unionized. We believe that our overall relationship with our
employees and unions is satisfactory.
RESEARCH & DEVELOPMENT
We have ongoing research and development projects. Major projects
include reducing the cost and chemical risk of pesticides, using natural
biological agents to control pests and diseases, testing new banana, pineapple
and other fruit varieties for improved crop yield and resistance to wind damage,
increasing the productivity of low-grade soils for improved banana growth and
experimenting with various other types of produce. Our research and development
expenses were $2.0 million in 1999, $1.5 million in 1998 and $1.4 million in
1997.
PATENTS, TRADEMARKS AND LICENSES
We have exclusive rights to use the DEL MONTE(R) brand name for fresh
fruits, fresh vegetables and other fresh produce on a royalty-free basis under a
worldwide, perpetual license from Del Monte Corporation, an unaffiliated company
that owns the DEL MONTE(R) trademark. This license allows us to use the
trademark "DEL MONTE" and the words "DEL MONTE" in association with any design
or logotype associated with the brand name, and certain other trademarks and
trademark rights, on or in connection with the production, manufacture, sale and
distribution of fresh fruit, fresh vegetables, fresh produce and certain other
specified products. This license also allows us to use certain patents and trade
secrets in connection with the production, manufacture, sale and distribution of
the fresh fruit, fresh vegetables, fresh produce and certain other specified
products.
We also sell produce under several other brand names for which we have
obtained registered trademarks, including Fielder(R), Purple Mountain(R) and
UTC(R).
ENVIRONMENTAL MATTERS
The management, use and disposal of some chemicals and pesticides are
an inherent aspect of our production operations. These activities and other
aspects of production are subject to various environmental laws and regulations,
depending upon the country of operation. In addition, in some countries of
operation, the environmental laws can require the investigation and, if
necessary, remediation of contamination related to past or current operations.
We are not a party to any dispute or legal proceeding relating to environmental
matters where we believe that the risk associated with the dispute or legal
proceeding would be material, except as described below and under "--Legal
Proceedings."
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<PAGE> 20
On May 10, 1993, the EPA identified the Kunia Well Site at our
plantation in Hawaii for potential listing on the National Priorities List
("NPL") under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA" or "Superfund"). This identification
was based upon the detection of elevated levels of certain chemicals in the soil
and ground water in the area of the Kunia Well Site in 1980. In 1980, we
discontinued use of the Kunia Well Site, provided an alternate water source to
area well users and commenced our own voluntary cleanup operation.
On December 16, 1994, the EPA issued a final rule adding the Kunia Well
Site to the NPL. We entered into an order with the EPA for the Kunia Well Site
on September 28, 1995. Under the terms of the order and the approved workplan,
we submitted a remedial investigation report in November 1998 for review by the
EPA. The remedial investigation report was finalized on January 21, 1999 and
approved by the EPA in February 1999. The final draft feasibility study was
submitted for EPA review in December 1999, and we expect that the feasibility
study will be finalized by the third quarter of 2000. The ultimate outcome and
any potential costs associated with this matter is estimated to be between
approximately $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). As of December 31, 1999, we
recorded a provision of approximately $4.2 million.
GOVERNMENT REGULATION
Agriculture and the sale and distribution of fresh produce are subject
to regulation by government authorities in the countries where the produce is
grown and the countries where such produce is marketed. We have internal
policies and procedures to comply with the most stringent regulations applicable
to our products, as well as a technical staff to monitor chemical usage and
ensure compliance with applicable laws and regulations. We believe we are in
material compliance with these laws and regulations. Additionally, we are not a
party to any dispute or legal proceeding relating to governmental regulations
where the risk associated with the dispute or legal proceeding would be
material, except as described in "Business--Environmental Matters" and "Legal
Matters."
We are also subject to a variety of government regulations in countries
where we market our products. The countries in which we market a material amount
of our products are the United States, the countries of the EU, Japan, China and
South Korea. These government regulations include:
o sanitary regulations, particularly in the United States and
the countries of the EU;
o regulations governing pesticide use and residue levels,
particularly in the United States, Japan and Germany; and
o regulations governing packaging and labeling, particularly in
the United States and the countries of the EU.
A failure to comply with applicable regulations could result in an
order barring the sale of part or all of a particular shipment of our products
or, in an extreme case, the sale of any of our products for a specified period.
This could have a material adverse effect on our results of operations and
financial condition
In addition, we believe there has been an increasing emphasis on the
part of consumers, as well as retailers and wholesale distributors, on food
safety issues, which could result in our business and operations being subject
to increasingly stringent food safety regulations or guidelines.
EUROPEAN UNION BANANA IMPORT REGULATIONS
The banana import regulations that took effect in the EU on July 1,
1993 have restricted our access to the EU banana market by favoring imports from
certain former British and French territories in Africa
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<PAGE> 21
(such as Cameroon), the Caribbean and the Pacific. In two separate rulings,
General Agreement on Tariffs and Trade ("GATT") panels have found the EU banana
import regulations to be illegal. In August 1997, the World Trade Organization
(the "WTO") Appellate Body ruled that the EU's banana import regulations violate
world trade rules.
On July 20, 1998, the EU introduced a modified banana import regime in
response to the WTO appellate ruling. The new banana regime maintains the system
of tariffs and quotas, but abolishes the existing system of licensing imports.
Under the new regime, licenses are allocated based on the amount of bananas
actually imported in the past. The United States challenged the modified regime
as failing to comply with the WTO appellate ruling and has threatened to impose
sanctions in the form of duties of 100% of the value of specified EU goods,
effective retroactively to March 3, 1999. The United States currently requires
importers of the specified EU goods to post bonds in the amount of the
threatened duties. In 1999, a WTO arbitral panel ruled that the existing
modifications made to the EU banana import regime were insufficient to bring it
into compliance with world trade rules. On November 11, 1999, the EU adopted a
proposal for further modification to the EU banana import regime to comply with
the WTO arbitral panel ruling. This proposal would involve the immediate opening
of additional quota with the institution of a tariff-only system by January 1,
2006. We cannot predict whether or when any additional changes will be made to
the EU banana import regulations in response to the WTO arbitral panel ruling,
or, if made, what effect the changes would have on us and our operations. See
"Risk Factors--We are exposed to political, economic and other risks from
operating a multinational business."
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<PAGE> 22
DESCRIPTION OF REVOLVING CREDIT FACILITY
The following is a summary of the revolving credit agreement entered
into by Fresh Del Monte and certain of its subsidiaries, as amended to date (the
"Revolving Credit Agreement"). The summary does not purport to be complete and
is subject to, and qualified by reference to, the provisions of the Revolving
Credit Agreement which we have filed with the Securities and Exchange
Commission. Capitalized terms used but not defined below have the meanings set
forth in the Revolving Credit Agreement.
<TABLE>
<S> <C>
Borrowers:...................... Fresh Del Monte; Global Reefer Carriers, Ltd.; Del Monte Fresh Produce (UK)
Ltd.; Wafer Limited; Del Monte Fresh Produce International Inc.; Del Monte
Fresh Produce N.A., Inc.;
Lenders:........................ Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland,"
New York Branch ("Rabobank"); ABN Amro Bank N.V., New York Branch, Union
Bank of California, N.A., Christiana Bank OG Kreditkasse ASA, New York
Branch, Wachovia Bank, Bank of America., The Fuji Bank Limited, Deutsche
Financial Services, Banque Francaise de L'Orient, Harris Trust and Savings
Bank, Banque Nationale de Paris, Chicago branch, First Union National Bank,
AGFirst Farm Credit Bank, Barclays Bank PLC, SunTrust Bank N.A., US Bancorp,
Artesia Bank Luxembourg, and Banque Artesia Netherlands.
Agent:.......................... Rabobank.
Facility:....................... $450 million revolving credit facility (reduced by $10.75 million in
November and May of each year, commencing November 1, 1999. Reduced to
$439.25 million as of December 31, 1999) including a letter of credit
facility of up to $35 million; a swing line facility of up to $15 million;
and a foreign exchange contract facility of up to $20 million (increased by
$5 million in May of each year, commencing May 1, 1999).
Purpose:........................ For general corporate purposes.
Guarantors:..................... Obligations under the facility are guaranteed by FDP N.V.; Del Monte Fresh
Produce B.V.; Del Monte Fresh Produce (Asia-Pacific) Limited; Claverton
Limited; Del Monte BVI Limited; Compania de Desarrollo Bananero de
Guatemala, S.A.; Del Monte Fresh Produce Company; FDM Holdings Limited;
Corporacion de Desarrollo Bananero de Costa Rica, S.A.; Corporacion de
Desarrollo Agricola Del Monte S.A.; and each Borrower.
Termination Date:............... Earlier of (1) May 19, 2003 or (2) termination of the facility commitment
pursuant to the Revolving Credit Agreement.
</TABLE>
20
<PAGE> 23
<TABLE>
<S> <C>
Interest Rate:.................. Base Rate advances bear interest at the greater of (1) Rabobank's base rate
from time to time and (2) 0.50% per annum above the Federal Funds Rate.
LIBO Rate advances bear interest at a rate based on the London interbank
offered rate plus a spread that varies between 0.75% and 2.25%. The spread
for LIBO Rate advances is determined quarterly based on the level of our
Leverage Ratio for that fiscal quarter along with the three immediately
preceding fiscal quarters and was 2.25% for the fourth quarter of 1999.
Commitment Fee:................. Between 0.25% and 0.45% per annum on the average daily Unused Commitment,
payable monthly in arrears. The rate is determined quarterly based on the
level of our Leverage Ratio.
Collateral:..................... The revolving credit facility is collateralized directly or indirectly by
substantially all the assets of Fresh Del Monte and our material
subsidiaries.
Financial Covenants:............ The following financial covenants apply to Fresh Del Monte and our
Subsidiaries:
MAXIMUM LEVERAGE RATIO. Maintenance of a ratio of Consolidated Total Debt to
Consolidated EBITDA for each fiscal quarter along with the three immediately
preceding fiscal quarters, of not more than 3.75 to 1.0.
MINIMUM TANGIBLE NET WORTH. Maintenance of Consolidated Tangible Net Worth as of the
end of each fiscal quarter of not less than the sum of (1) $135,000,000, (2) 50%
of our cumulative Consolidated Net Income for fiscal quarters ending on and after
March 27, 1998 and (3) 85% of the increase in Tangible Net Worth resulting from the
IAT transaction.
MINIMUM INTEREST COVERAGE. Maintenance of a ratio of Consolidated EBITDA to
Consolidated interest expense for each fiscal quarter indicated below along with
the three immediately preceding fiscal quarters, of not less than 2.5 to 1.0.
MINIMUM FIXED CHARGES COVERAGE RATIO. Maintenance of a Fixed Charges Coverage
Ratio for each fiscal quarter along with the three immediately preceding fiscal
quarters, of not less than 1.25 to 1.0.
</TABLE>
21
<PAGE> 24
<TABLE>
<S> <C>
Certain Other Covenants:........ Other covenants applicable to the Borrowers include limitations on liens,
the incurrence or prepayment of debt, the payment of dividends, mergers and
similar transactions, sales of assets, investments, amendments to the
constituent documents; a limitation on annual Capital Expenditures of
$1,000,000 if we are (or would, as a result of the expenditure, be) in
breach of our financial covenants; a requirement to pledge the inventory,
receivables and intellectual property of and equity interests in any
subsidiary that becomes a Material Subsidiary; an annual limit of $50.0
million for mergers and investments in stock of companies conducting a
similar business; and a negative pledge.
Events of Default:.............. Events of Default include non-payment, material misrepresentation, covenant
default, cross-default, bankruptcy and insolvency, certain judgments, a
Change in Control and certain Employee Retirement Income Security Act events.
Governing Law:.................. The laws of the State of New York.
</TABLE>
Pursuant to the Revolving Credit Agreement, the Borrowers and their
subsidiaries generally are prohibited from:
o incurring debt and related liens, with certain limited
exceptions;
o declaring or paying any dividends, other than in shares;
o returning any capital to their stockholders, or
o making any distribution of assets, share capital, warrants,
rights, options, obligations or securities to their
stockholders, other than a distribution in shares.
So long as there is no continuing default under the Revolving Credit
Agreement and no default would result,
o we may declare and pay dividends and distributions in cash
solely out of and up to 50% of our net income (computed on a
non-cumulative, consolidated basis in accordance with U.S.
GAAP) for the fiscal year immediately preceding the year in
which the dividend or distribution is paid; and
o any subsidiary of a Borrower may declare and pay cash
dividends to the Borrower and to any other wholly-owned
subsidiary of a Borrower of which it is a direct or indirect
subsidiary; and
o any subsidiary that is not a wholly-owned subsidiary may
declare and pay cash dividends consistent with past practices.
22
<PAGE> 25
ITEM 2. DESCRIPTION OF PROPERTY
The following table summarizes the plantation acreage owned or leased
by us and the principal products grown on such plantations by location as of the
end of 1999:
<TABLE>
<CAPTION>
Acres Under Production
--------------------------------
Location Acres Owned Acres Leased Products
- -------- ----------- ------------ --------
<S> <C> <C> <C>
Costa Rica................. 22,500 1,700 Bananas, Pineapples
Guatemala.................. 15,800 2,900 Bananas, Melons
Brazil...................... 1,800 -- Bananas
Hawaii..................... -- 9,400 Pineapples
Arizona.................... -- 1,200 Melons
Mexico..................... -- 1,600 Melons
Chile...................... 5,400 -- Deciduous fruit
California................. 600 -- Deciduous fruit
Uruguay.................... 7,600 -- Citrus
Georgia ................... -- 1,140 Onions
</TABLE>
In addition, we lease port and other facilities and office space in a
variety of locations worldwide. We are currently leasing approximately 2,000
acres in Hawaii on a month to month basis pending resolution of the
environmental issues relating to the Kunia Well Site. See "--Environmental
Matters."
ITEM 3. LEGAL PROCEEDINGS
DBCP LITIGATION
Starting in December 1993, two of our 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, our U.S. 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 our 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 our subsidiaries and whether these are the same individuals who
have already settled their claims against our subsidiaries. Our subsidiaries
moved to dismiss the action on jurisdictional grounds, which motion was denied.
The Company's subsidiaries have moved from reconsideration of that decision,
which remains pending.
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<PAGE> 26
The U.S. subsidiaries have not settled the DBCP claims of approximately
3,500 claimants represented by different counsel who have filed actions in
Mississippi in 1996 and Hawaii in 1997. Each of those actions was dismissed by
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 our 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. Our 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 our subsidiaries. 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.
CHIQUITA LITIGATION
On August 19, 1994, Chiquita International Limited ("Chiquita") filed
suit in Circuit Court in Dade County, Florida against Fresh Del Monte Produce
N.V. seeking injunctive relief and damages of approximately $220 million for
tortious interference and conspiracy with respect to a contractual relationship
between Chiquita and a Philippine producer, Tagum Agricultural Development
Company, Inc. ("Tadeco"). Chiquita thereafter amended its complaint to include
two of our subsidiaries as defendants. On March 26, 1999, the court granted our
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. We have entered into a settlement agreement with
Chiquita whereby Chiquita agreed to dismiss its appeal to the Florida Supreme
Court in exchange for our agreement not to pursue our claim for attorney's fees
against Chiquita.
ECUADORIAN SHRIMP FARMERS LITIGATION
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. 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 our
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
24
<PAGE> 27
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 our subsidiaries.
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.
BRAZILIAN JOINT VENTURE ARBITRATION
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.
PHILIPPINE TAX MATTER
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 issued 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 December 31, 1999, was $19 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.
KUNIA WELL SITE
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.
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<PAGE> 28
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). As of December 31, 1999, Fresh
Del Monte recorded a liability of approximately $4.2 million, which is included
in other noncurrent liabilities in the accompanying balance sheet.
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 us.
ITEM 4. CONTROL OF REGISTRANT
Pursuant to our Memorandum and Articles of Association, our authorized
share capital consists of 200,000,000 ordinary shares having a par value of
$0.01 per share, of which 53,763,600 shares were issued and outstanding as of
March 23, 2000, and 50,000,000 preferred shares having a par value of $0.01 per
share, none of which have been issued.
The following table sets forth certain information as of March 23, 2000, with
respect to each shareholder known to Fresh Del Monte Produce Inc. to own more
than 10% of its ordinary shares and with respect to the ownership of ordinary
shares by all directors and officers of Fresh Del Monte Produce Inc. as a group.
The information in the table has been calculated in accordance with Rule 13d-3
under the Securities Exchange Act of 1934.
<TABLE>
<CAPTION>
Person or Group Number of Shares Owned Percent of Class
- --------------- ---------------------- ----------------
<S> <C> <C>
IAT Group Inc.(1)(2)......................... 30,972,836 57.6%
Ahmed Abu-Ghazaleh (2)(3).................... 30,972,836 57.6
Sumaya Abu-Ghazaleh (2)(3)................... 30,972,836 57.6
Mohammad Abu-Ghazaleh (2)(4)(5).............. 33,368,341 62.1
Oussama Abu-Ghazaleh (2)(4)(5)............... 31,756,075 59.1
Maher Abu-Ghazaleh (2)(3)(5)................. 31,756,075 59.1
Amir Abu-Ghazaleh (2)(3)(5).................. 32,032,217 59.6
All directors and officers as a group
(16 persons) (6)............................ 36,302,461 66.7%
</TABLE>
- ----------
(1) The registered office address of IAT Group Inc. is c/o W.S. Walker &
Company, Walker House, First Floor, Mary Street, P.O. Box 265, George
Town, Grand Cayman, Cayman Islands.
(2) Ahmed Abu-Ghazaleh, Sumaya Abu-Ghazaleh, Mohammad Abu-Ghazaleh, Oussama
Abu-Ghazaleh, Maher Abu-Ghazaleh and Amir Abu-Ghazaleh beneficially own
20%, 10%, 17.5%, 17.5%, 17.5% and 17.5%, respectively of IAT Group
Inc.'s outstanding voting equity securities. Individually, no
Abu-Ghazaleh family member owns a controlling interest in IAT Group
Inc.; however, because each of the IAT Group Inc. shareholders votes
with other family members, the Abu-Ghazaleh family jointly controls IAT
Group Inc. As a result, the individual Abu-Ghazaleh family members may
be deemed to beneficially own the ordinary shares directly owned by IAT
Group Inc. and to share voting and dispositive power with respect to
the ordinary shares directly owned by IAT Group Inc. However, because
no one individual Abu-Ghazaleh family member owns a controlling
interest in IAT Group Inc., but rather the family members must act in
concert to control IAT Group Inc., no individual Abu-Ghazaleh family
member has the sole power to vote or to direct the voting of, or the
sole power to dispose or to direct the disposition of, any ordinary
shares directly owned by IAT Group Inc.
26
<PAGE> 29
(3) The business address of Ahmed Abu-Ghazaleh, Sumaya Abu-Ghazaleh, Maher
Abu-Ghazaleh and Amir Abu-Ghazaleh is c/o Ahmed Abu-Ghazaleh & Sons Co.
Ltd., No. 18, Hamariya Fruit & Vegetable Market, Dubai, United Arab
Emirates.
(4) The business address of Mohammad Abu-Ghazaleh and Oussama Abu-Ghazaleh
is c/o Del Monte Fresh Produce (Chile) S.A., Avenida Santa Maria 6330,
Vitacura, Santiago, Chile.
(5) Includes 30,972,836 ordinary shares owned directly by IAT Group Inc.
which each of the named individuals may be deemed to beneficially own
indirectly by virtue of their ownership interest in IAT Group Inc.
(6) Includes (1) 30,972,836 shares owned directly by IAT Group Inc. which
each of Mohammad Abu-Ghazaleh, Maher Abu-Ghazaleh and Amir Abu-Ghazaleh
may be deemed to beneficially own indirectly by virtue of his ownership
interest in IAT Group Inc., (2) an aggregate of 4,700,625 shares owned
directly by certain directors and officers and (3) an aggregate of
629,000 ordinary shares subject to vested and currently exercisable
options held by certain directors and officers.
ITEM 5. NATURE OF TRADING MARKET
ORDINARY SHARE PRICES AND RELATED MATTERS
The Company's ordinary shares are traded solely on the New York Stock
Exchange, under the symbol FDP, and commenced trading on such exchange on a
when-issued basis on October 24, 1997.
The following table presents the high and low sales prices of the
ordinary shares for the quarters indicated as reported on the New York Stock
Exchange Composite Tape:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
1998
First quarter.......................................... $16.19 $10.50
Second quarter......................................... $19.94 $15.00
Third quarter.......................................... $20.19 $14.50
Fourth quarter......................................... $23.63 $14.25
1999
First quarter.......................................... $21.00 $15.25
Second quarter......................................... $18.44 $13.00
Third quarter.......................................... $15.69 $10.56
Fourth quarter......................................... $11.38 $ 6.31
</TABLE>
As of December 31, 1999, there were 53,763,600 ordinary shares
outstanding. We believe that approximately 29% of the outstanding ordinary
shares were held by holders in the United States, as of December 31, 1999.
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
Our charter authorizes us to issue an aggregate of 200,000,000 ordinary
shares with a par value of $0.01 per share. Of those 200,000,000 authorized
ordinary shares, 53,763,600 shares were issued and outstanding as of March 23,
2000, all of which are credited as fully paid. We may not call for any further
capital from any holder of ordinary shares outstanding. Under Cayman Islands
law, non-residents of the Cayman Islands may freely hold, vote and transfer
ordinary shares in the same manner as Cayman Islands residents, subject to the
provisions of the Companies Law (1998 Revision) and our Articles. No Cayman
Islands laws or regulations restrict the export or import of capital, or affect
the payment of dividends to non-resident holders of ordinary shares.
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<PAGE> 30
ITEM 7. TAXATION
CAYMAN ISLANDS
There is at present no direct taxation in the Cayman Islands on
interest, dividends and gains payable to or by Fresh Del Monte and all such
monies will be received free of all Cayman Islands taxes. Accordingly, U.S.
holders of ordinary shares are not presently subject to Cayman Islands income or
withholding taxes with respect to such holdings. We are an exempted company
incorporated under Cayman Islands law and have obtained an undertaking as to tax
concessions pursuant to Section 6 of the Tax Concessions Law (1995 Revision)
which provides that for a period of 20 years from April 22, 1997, no law
thereafter enacted in the Cayman Islands imposing any taxes or duty to be levied
on profits, income, gains or appreciations or which is in the nature of estate
duty or inheritance tax shall be payable by us on or in respect of our shares or
other obligations.
UNITED STATES
The following discussion summarizes some of the principal U.S. federal
income tax considerations that may be relevant to you if you invest in ordinary
shares and are a U.S. holder. You will be a U.S. holder if you are:
o an individual who is a citizen or resident of the United
States,
o a U.S. domestic corporation, or
o any other person that is subject to U.S. federal income tax on
a net income basis in respect of its investment in ordinary
shares.
This summary deals only with U.S. holders that hold ordinary shares as capital
assets. It does not address considerations that may be relevant to you if you
are an investor that is subject to special tax rules, such as a bank, thrift,
real estate investment trust, regulated investment company, insurance company,
dealer in securities or currencies, trader in securities or commodities that
elects mark-to-market treatment, person that will hold ordinary shares as a
position in a "straddle" or conversion transaction, tax exempt organization,
person whose "functional currency" is not the dollar, or person that holds 10%
or more of our voting shares.
Dividends paid with respect to ordinary shares to the extent of our
current and accumulated earnings and profits as determined under U.S. federal
income tax principles will be taxable to you as ordinary income at the time that
you receive such amounts. Dividends generally will be foreign source income and
will not be eligible for the dividends-received deduction available to domestic
corporations.
Upon a sale, exchange or other taxable disposition of ordinary shares
you generally will recognize gain or loss for federal income tax purposes in an
amount equal to the difference between (1) the sum of the amount of cash and the
fair market value of any property you receive and (2) your tax basis in the
ordinary shares that you dispose of. Such gain or loss will generally be
long-term capital gain or loss if you have held the ordinary shares for more
than one year. Net long-term capital gain recognized by an individual U.S.
holder generally will be subject to a maximum rate of 20% for ordinary shares
held for more than one year. The ability of U.S. holders to offset capital
losses against ordinary income is limited. Any gain generally will be treated as
U.S. source income.
You may be subject to backup withholding at a rate of 31% with respect
to dividends paid on ordinary shares or the proceeds of a sale, exchange or
other disposition of ordinary shares, unless you:
o are a corporation or come within another exempt category, and,
when required, you demonstrate this fact or
28
<PAGE> 31
o provide a correct taxpayer identification number, certify that
you are not subject to backup withholding and otherwise comply
with applicable requirements of the backup withholding rules.
Any amount withheld under these rules will be creditable against your federal
income tax liability. You should consult your tax advisor regarding your
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption if applicable.
ITEM 8. SELECTED FINANCIAL DATA
On September 17, 1998, Fresh Del Monte acquired 14 wholly-owned
operating companies, referred to as IAT, from IAT Group Inc. and its
shareholders. At the time of the IAT transaction, IAT Group Inc. owned
approximately 86% of FG Holdings Limited, which in turn owned approximately 63%
of Fresh Del Monte. As a result, the IAT transaction was accounted for as a
combination of entities under common control using the as if pooling of
interests method of accounting.
Under the as if pooling of interests method of accounting, the
historical results of Fresh Del Monte have been restated to combine the
operations of Fresh Del Monte and IAT for all periods subsequent to August 29,
1996, the date Fresh Del Monte and IAT came under common control. The recorded
assets and liabilities of Fresh Del Monte and IAT were carried forward to Fresh
Del Monte's consolidated financial statements at their historical amounts and
consolidated earnings include the earnings of Fresh Del Monte and IAT for all
periods subsequent to the date Fresh Del Monte and IAT came under common
control. Our results prior to August 29, 1996 reflect the results of IAT only.
Fresh Del Monte was organized to acquire beneficial ownership and
control of all of the outstanding common stock of FDP N.V. and GRC. The
acquisition of FDP N.V. and GRC, which was accounted for as a purchase, was
completed on December 20, 1996. The results of operations of FDP N.V. and GRC
are included in our results commencing December 21, 1996.
Fresh Del Monte's fiscal year end is the last Friday of the calendar
year or the first Friday subsequent to the end of the calendar year. Prior to
1999, IAT's fiscal year end was September 30. In 1999, IAT's fiscal year end was
changed to conform to Fresh Del Monte's fiscal year end. As a result, the
following selected consolidated financial information includes balance sheet
data and income statement data for IAT as of and for each of the four years
ended September 30, 1995, 1996, 1997 and 1998, respectively. As a result of the
change in IAT's year end, the results of operations for IAT for the period
October 1, 1998 to January 1, 1999, a loss of $7.6 million, are not included in
any of the periods presented in the consolidated statements of income, but are
reflected as an adjustment to retained earnings as of January 2, 1999.
29
<PAGE> 32
The following selected consolidated financial information of Fresh Del
Monte as of and for the year ended December 29, 1995 is derived from the
combination of the financial statements of IAT as of and for the year ended
September 30, 1995 prepared in accordance with Chilean, Dutch and United States
generally accepted accounting principles and International Accounting Standards.
The following selected consolidated financial information of Fresh Del Monte for
the years ended December 27, 1996, December 26, 1997, January 1, 1999 and
December 31, 1999, is derived from the respective audited consolidated financial
statements of Fresh Del Monte prepared in accordance with United States
generally accepted accounting principles.
This data should be read in conjunction with the consolidated financial
statements, related notes and other financial information included elsewhere in
this annual report.
<TABLE>
<CAPTION>
Year ended
--------------------------------------------------------------------------------------
December 29,
1995 December 27, December 26, January 1, December 31,
(Unaudited) 1996 1997 1999 1999
-------------- -------------- -------------- -------------- --------------
(In millions, except share and per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales ......................... $ 220.8 $ 278.3 $ 1,452.4 $ 1,600.1 $ 1,743.2
Cost of products sold ............. 209.5 249.3 1,288.7 1,405.4 1,592.6
-------------- -------------- -------------- -------------- --------------
Gross profit ...................... 11.3 29.0 163.7 194.7 150.6
Selling, general and
administrative expenses ......... 8.2 11.5 51.4 58.3 63.5
Amortization of goodwill .......... -- -- 1.5 1.7 2.6
Acquisition-related expenses ...... -- -- -- 4.0 --
Hurricane Mitch charge ............ -- -- -- 26.5 --
-------------- -------------- -------------- -------------- --------------
Operating income .................. 3.1 17.5 110.8 104.2 84.5
Interest expense .................. 10.5 12.8 45.7 30.3 30.2
Interest income ................... 0.8 1.0 5.6 4.3 2.6
Other income, net ................. 9.1 1.7 6.0 11.4 14.7
-------------- -------------- -------------- -------------- --------------
Income before provision (benefit)
for income taxes and
extraordinary item .............. 2.5 7.4 76.7 89.6 71.6
Provision (benefit) for income
taxes ........................... 0.8 (0.6) 13.1 12.2 14.7
-------------- -------------- -------------- -------------- --------------
Income before extraordinary item .. 1.7 8.0 63.6 77.4 56.9
Extraordinary charge on early
extinguishment of debt ......... -- -- 10.4 18.1 --
-------------- -------------- -------------- -------------- --------------
Net income ........................ 1.7 8.0 53.2 59.3 56.9
Redemption premium, dividends and
accretion on convertible
preferred shares ............... -- -- (22.5) -- --
-------------- -------------- -------------- -------------- --------------
Net income applicable to ordinary
shareholders ................... $ 1.7 $ 8.0 $ 30.7 $ 59.3 $ 56.9
============== ============== ============== ============== ==============
Basic and diluted per share
income applicable to ordinary
shareholders:
Before extraordinary item ....... $ 0.28 $ 1.20 $ 0.94 $ 1.44 $ 1.06
Extraordinary charge ............ $ -- $ -- $ (0.24) $ (0.34) $ --
Net income ...................... $ 0.28 $ 1.20 $ 0.70 $ 1.10 $ 1.06
Weighted average number of
ordinary shares outstanding:
Basic ........................... 6,000,000 6,687,776 43,765,188 53,632,656 53,763,600
Diluted ......................... 6,000,000 6,687,776 43,765,188 53,774,831 53,805,237
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents ......... $ 2.0 $ 32.4 $ 85.7 $ 32.8 $ 31.2
Working capital ................... (2.3) 85.2 134.6 177.2 203.7
Total assets ...................... 274.3 920.8 1,009.3 1,034.0 1,216.2
Total debt ........................ 118.6 438.6 354.1 354.2 504.1
Shareholders' equity .............. $ 99.6 $ 147.0 $ 342.8 $ 382.5 $ 425.8
</TABLE>
30
<PAGE> 33
For the convenience of the reader and due to the significance of the
operations of FDP N.V., we are presenting the following selected consolidated
financial information of FDP N.V. for the fifty-one week period ended December
20, 1996, prior to our acquisition of FDP N.V. This information has been derived
from the audited consolidated financial statements of FDP N.V. prepared in
accordance with United States generally accepted accounting principles. Prior to
the IAT transaction, results for FDP N.V. were reported by Fresh Del Monte as
the results of the principal predecessor entity.
Fifty-one week
period ended
December 20, 1996
FDP N.V.
-----------------
(in millions)
INCOME STATEMENT DATA:
Net sales ...................................... $ 1,167.5
Cost of products sold .......................... 1,065.8
----------
Gross profit ................................... 101.7
Selling, general and administrative expenses ... 51.8
Amortization of goodwill ....................... 4.2
Acquisition-related expenses ................... 3.2
Special charge to goodwill(1) .................. 138.7
----------
Operating loss ................................. (96.2)
Interest expense ............................... 36.1
Interest income ................................ 2.0
----------
Loss before provision for income taxes ......... (130.3)
Provision for income taxes ..................... 2.6
----------
Net loss ....................................... $ (132.9)
==========
- ----------
(1) FDP N.V. continuously assessed the carrying value of goodwill to
determine if an impairment had occurred. Accordingly, a special charge
to the carrying value of goodwill was recorded in 1996.
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
We are a world leader in the production, distribution and marketing of
fresh produce. Our products are marketed throughout the world under the DEL
MONTE(R) brand name which has been in existence since 1892 and is a widely
recognized symbol of product quality and reliability. Our major product
categories include bananas and other fresh fruit and vegetables, which includes
primarily pineapples, deciduous fruit and melons. With 1999 sales of over four
billion pounds of bananas and approximately two billion pounds of other fresh
fruit and vegetables, we believe we are the third largest marketer of bananas
and the largest marketer of fresh pineapples in the world, as well as the
largest marketer of cantaloupes and honeydews sold in the United States in the
off-season, November to May.
In connection with the IAT transaction, we issued six million ordinary
shares, paid $25.0 million in cash and assumed approximately $130.0 million of
indebtedness. Prior to the IAT transaction, IAT Group Inc. was engaged primarily
in the production, transportation, distribution and marketing of deciduous fruit
and other fresh produce on a worldwide basis and conducted operations in Chile,
the United States, the Netherlands and Uruguay.
Because IAT Group Inc. was indirectly controlled by Fresh Del Monte
prior to the IAT transaction, the IAT transaction was accounted for as a
combination of entities under common control in a manner similar to a pooling of
interests, using the as if pooling of interests method of accounting under
United
31
<PAGE> 34
States generally accepted accounting principles. As a result, our consolidated
earnings include the consolidated earnings of Fresh Del Monte and IAT for all
periods subsequent to the date Fresh Del Monte and IAT came under common
control, August 29, 1996. The reported retained earnings of Fresh Del Monte and
IAT have been combined and restated as our consolidated retained earnings. Our
results prior to August 29, 1996 represent the results of only IAT.
Since December 20, 1996, we have owned both FDP N.V. and GRC. Our
acquisition of these two companies was accounted for as a purchase and,
accordingly, the purchase price was allocated to the assets acquired and
liabilities assumed based on appraisals and other estimates of their underlying
fair values. The excess of the purchase price over the fair value of net assets
acquired of $44.8 million was classified as goodwill which is being amortized
over 40 years. The results of operations of FDP N.V. and GRC are included in our
results commencing December 21, 1996.
NET SALES
Our net sales are affected by numerous factors including the balance
between the supply of and demand for our products and competition from other
fresh produce. Our net sales are also dependent on our ability to supply a
consistent volume and quality of fresh produce to the markets we serve. For
bananas, seasonal variations in demand as a result of increased supply and
competition from other fruits are reflected in the seasonal fluctuations in
banana prices, with the first six months of the year generally exhibiting
stronger demand and higher prices, except in those years where an excess supply
exists. See "--Seasonality." Because our operations are conducted in many areas
of the world and involve sales denominated in a variety of currencies, net sales
as expressed in dollars may also be affected by fluctuations in rates of
exchange between currencies.
Average sales prices for bananas in 1999 decreased significantly from
1998. The decrease in average banana sales prices was attributable to a
depressed banana market in Europe and North America, partially offset by the
effect of a weaker dollar against the Japanese Yen. A weaker dollar tends to
increase net sales because our sales are denominated in a variety of currencies.
Our net sales growth in recent years has been achieved primarily
through acquisitions, increased banana and pineapple sales volume in existing
markets, higher pricing on the "DEL MONTE GOLD(R) EXTRA SWEET" pineapple and
sales of bananas in new markets such as Eastern Europe, China and South America.
Our net sales growth in recent years is also attributable to a broadening of our
product line in the other fresh fruit and vegetables category.
COST OF PRODUCTS SOLD
Cost of products sold is principally composed of two elements, product
and distribution costs. Product cost for company-grown produce is primarily
composed of cultivation (the cost of growing crops), harvesting, packaging,
labor, depreciation and farm administration. Product cost for produce obtained
from independent growers is composed of produce cost, packaging costs and, in
some cases, profit sharing. Distribution costs include ocean freight, inland and
air freight, port and warehouse expenses. Ocean freight is the most significant
component of distribution costs and is comprised of the cost of chartering
refrigerated vessels and vessel operating expenses. Vessel operating expenses
include ship operation and maintenance, depreciation, fuel, which is subject to
international supply and demand trends, and port charges. Variations in
linerboard prices, which affect the cost of boxes and other packaging materials,
and fuel prices, can have a significant impact on our product cost and,
accordingly, profit margins. Linerboard, plastic, resin and fuel prices have
historically been volatile. Linerboard and fuel prices increased in 1999 as
compared to 1998.
32
<PAGE> 35
Historically, we have received subsidies from the Costa Rican
government for the production and export of pineapples which we account for as a
reduction in cost of products sold. These subsidies which amounted to
approximately $9.3 million for 1999, $8.2 million for 1998 and $7.4 million for
1997, expired on December 31, 1999.
In general, changes in the volume of the products we sell have a direct
impact on our per-box product cost. Within any particular year, a significant
portion of our cost of products sold is fixed, both with respect to
company-owned operations and with respect to the farms of independent growers
from whom we have agreed to purchase all the product they produce. Accordingly,
higher volumes directly reduce the average per-box cost, while lower volumes
directly increase the average per-box cost. In addition, because the volume that
will actually be produced on plantations owned by us and by independent growers
in any given year depends on a variety of factors, including weather, that are
beyond our control or the control of our independent growers, it is difficult to
predict volumes and per-box costs.
In 1998, Guatemalan banana operations were damaged as a result of
Hurricane Mitch. The hurricane damage resulted in a charge of $26.5 million for
asset write offs and other costs, net of insurance proceeds and reduced banana
production by approximately six million and two million boxes in 1999 and 1998,
respectively, or approximately 5% and 2%, respectively, of our worldwide banana
production.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses include primarily the
costs associated with selling in North America, Japan, the United Kingdom,
Belgium and Holland, where we have our own sales force, advertising and
promotional expenses and general corporate overhead and other related
administrative functions, including depreciation associated with these
operations.
INTEREST EXPENSE
Interest expense consists primarily of interest on borrowings under
working capital facilities that we maintain and interest on other long-term debt
and capital lease obligations.
OTHER INCOME, NET
Other income, net, primarily consists of Hurricane Mitch insurance
proceeds in 1999, equity earnings in unconsolidated companies including melon
and pineapple and deciduous fruit joint ventures, a box manufacturing facility,
a German shipping company that was an unconsolidated subsidiary prior to
December 23, 1997, and a German limited partnership engaged in the distribution
of fresh produce in Northern Europe, together with currency exchange gains or
losses and other income or expenses. During 1999, we recognized $13.5 million of
insurance proceeds in connection with Hurricane Mitch, which is included in
other income, net.
PROVISION FOR INCOME TAXES
Income taxes consist of the consolidation of the tax provisions,
computed on a separate entity basis, in each country in which we have
operations. Since we are a non-U.S. company with substantial operations outside
the United States, a substantial portion of our results of operations is not
subject to U.S. taxation. We are subject to U.S. taxation on constructive
operating profits of our U.S. distribution company, calculated in accordance
with the tax provisions governing related party transactions.
33
<PAGE> 36
RESULTS OF OPERATIONS
The following table presents, for each of the periods indicated,
certain income statement data expressed as a percentage of net sales:
<TABLE>
<CAPTION>
Year Ended
-------------------------------------------------
December 26, January 1, December 31,
1997 1999 1999
------------ ---------- ------------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales ............................ 100.0% 100.0% 100.0%
Gross profit ......................... 11.3 12.2 8.6
Selling, general and administrative
expenses .......................... 3.5 3.6 3.6
Operating income ..................... 7.6 6.5 4.8
Interest expense ..................... 3.1 1.9 1.7
Income before extraordinary item ..... 4.4 4.8 3.3
Net income ........................... 3.7 3.7 3.3
</TABLE>
The following tables present for each of the periods indicated (1) net sales by
geographic region, (2) net sales by product category and (3) gross profit by
product category, and in each case, the percentage of the total represented
thereby:
<TABLE>
<CAPTION>
Year Ended
----------------------------------------------------------------------
December 26, January 1, December 31,
1997 1999 1999
------------------ ------------------ -------------------
($ in millions)
<S> <C> <C> <C> <C> <C> <C>
NET SALES BY GEOGRAPHIC REGION:
North America ..................... $ 710.7 49% $ 781.0 49% $ 830.4 48%
Europe ............................ 425.8 29 522.8 33 601.5 34
Asia Pacific ...................... 233.9 16 237.7 15 280.7 16
Other ............................. 82.0 6 58.6 3 30.6 2
-------- ---- -------- ---- -------- ----
Total ........................... $1,452.4 100% $1,600.1 100% $1,743.2 100%
======== ==== ======== ==== ======== ====
NET SALES BY PRODUCT CATEGORY:
Bananas ........................... $ 822.3 57% $ 897.5 56% $ 951.3 55%
Other fresh fruit and vegetables .. 544.3 37 638.2 40 701.3 40
Non-produce ....................... 85.8 6 64.4 4 90.6 5
-------- ---- -------- ---- -------- ----
Total ........................... $1,452.4 100% $1,600.1 100% $1,743.2 100%
======== ==== ======== ==== ======== ====
GROSS PROFIT BY PRODUCT CATEGORY:
Bananas ........................... $ 40.6 25% $ 32.7 17% $ (4.0) (3)%
Other fresh fruit and vegetables .. 109.9 67 160.6 82 155.5 103
Non-produce ....................... 13.2 8 1.4 1 (0.9) --
-------- ---- -------- ---- -------- ----
Total ........................... $ 163.7 100% $ 194.7 100% $ 150.6 100%
======== ==== ======== ==== ======== ====
</TABLE>
1999 COMPARED WITH 1998
NET SALES
In 1999 net sales were $1,743.2 million compared with $1,600.1 million
for 1998, an increase of 9%. The increase in net sales of $143.1 million was
primarily the result of higher sales volume of our major product categories,
bananas and other fresh fruit and vegetables, partially offset by lower per unit
sales prices of bananas.
Net sales of bananas increased 6% in 1999 compared with 1998, as a
result of increased sales volume in Europe and North America and higher per unit
sales prices in the Asia Pacific region, partially
34
<PAGE> 37
offset by lower per unit sales prices in Europe and North America. Banana unit
sales volume increased 11% in 1999 compared with 1998 due primarily to unit
sales volume gains in the North American and European markets of 22% and 9%,
respectively. The increase in unit sales volume in North America and Europe
resulted primarily from incremental purchases from independent growers. The
decrease in per unit sales pricing in Europe and North America resulted from an
oversupply in these markets.
Net sales of other fresh fruit and vegetables increased 10% in 1999
compared with 1998 primarily due to higher unit sales volume in Europe and North
America of 14% and 7%, respectively, partially offset by lower per unit sales
prices. The increase in unit sales volume in Europe and North America resulted
from the conversion and expansion of an existing pineapple plantation in Costa
Rica from traditional varieties to "DEL MONTE GOLD(R) EXTRA SWEET" pineapples,
as well as incremental purchases of traditional pineapple varieties from
independent growers.
Our net sales in 1999 were positively impacted by the weakening of the
dollar versus the Japanese yen, partially offset by the strengthening of the
dollar against European currencies for which we receive sales proceeds,
principally the Deutsche Mark, Lira and Pound Sterling.
COST OF PRODUCTS SOLD
Cost of products sold was $1,592.6 million for 1999 compared with
$1,405.4 million for 1998, an increase of 13%. The increase in cost of products
sold was principally attributable to the increased unit sales volume.
GROSS PROFIT
Gross profit was $150.6 million for 1999 compared with $194.7 million
for 1998, a decrease of $44.1 million or 23%. As a percentage of net sales,
gross profit decreased from 12.2% in 1998 to 8.6% in 1999 and was negatively
impacted by lower per unit sales price of bananas in North America and Europe.
The negative impact of per unit banana sales prices was partially offset by
higher net sales in the other fresh fruit and vegetable category, primarily due
to strong pineapple pricing combined with reduced cost of ocean freight on a per
unit basis.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased $5.2 million to
$63.5 million in 1999 compared with $58.3 million in 1998. This increase is
primarily a result of increased selling and marketing expenses related to the
increase in sales volume together with an increase in professional fees.
INTEREST EXPENSE
Interest expense of $30.2 million in 1999 remained relatively constant
compared with 1998.
OTHER INCOME, NET
Other income, net of $14.7 million in 1999 was $3.3 million higher than
the $11.4 million recorded in 1998. This change represents the proceeds from an
insurance claim related to Hurricane Mitch of $13.5 million, partially offset by
a decrease in equity earnings in unconsolidated subsidiaries and an increase in
currency exchange losses in 1999.
35
<PAGE> 38
PROVISION FOR INCOME TAXES
Our effective income tax rate increased from 14% in 1998 to 21% in 1999
primarily due to an increase in taxable income for certain subsidiaries in
jurisdictions with higher tax rates.
1998 COMPARED WITH 1997
NET SALES
In 1998 net sales were $1,600.1 million compared with $1,452.4 million
for 1997, an increase of 10%. The increase in net sales of $147.7 million was
primarily the result of higher sales volume for our major product categories,
bananas and other fresh fruit and vegetables.
Net sales of bananas increased 9% in 1998 compared with 1997, as a
result of increased sales volume in Europe and North America and higher per unit
sales prices in the Asia Pacific region. Banana unit sales volume increased 9%
in 1998 compared with 1997 due primarily to unit sales volume increases in the
European and North American markets of 24% and 10%, respectively, partially
offset by an 11% decrease in sales volume in the Asia Pacific region. The
increase in unit sales volume in Europe and North America resulted from
incremental purchases from independent growers and improved yields at some of
our banana operations. The decrease in unit sales volume in the Asia Pacific
region was due to the lingering effects of the drought that affected production
of bananas in this region during 1997 through the third quarter of 1998.
Net sales of other fresh fruit and vegetables increased 17% in 1998
compared with 1997 primarily due to higher unit sales volume in Europe and North
America of 22% and 14%, respectively, and higher per unit sales prices in
Europe. The increase in unit sales volume in Europe and North America resulted
from the conversion and expansion of an existing pineapple plantation in Costa
Rica from traditional varieties to "DEL MONTE GOLD(R) EXTRA SWEET" pineapples as
well as incremental purchases of traditional pineapple varieties from
independent growers and increased melon production from our operations in the
United States, Mexico and Brazil.
Our net sales in 1998 were adversely impacted by the strengthening of
the dollar versus the other major currencies in which we receive sales proceeds,
principally the Deutsche Mark, Japanese Yen and the Italian Lira.
COST OF PRODUCTS SOLD
Cost of products sold was $1,405.4 million for 1998 compared with
$1,288.7 million for 1997, an increase of 9%. The increase in cost of products
sold was principally attributable to the increased unit sales volume.
36
<PAGE> 39
GROSS PROFIT
Gross profit was $194.7 million for 1998 compared with $163.7 million
for 1997, an increase of $31.0 million or 18.9%. As a percentage of net sales,
gross profit improved from 11.3% in 1997 to 12.2% in 1998. Gross profit for 1998
was positively impacted by increased sales of other fresh fruit and vegetables,
primarily due to increased sales of higher-margin pineapple, higher volumes of
deciduous fruit and melons and reduced cost of ocean freight per unit of sales,
partially offset by reduced gross margin on bananas. This positive impact on
gross profit was partially offset by reduced average sales price per box of
melons and the strengthening of the dollar.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased $6.9 million to
$58.3 million in 1998 compared with $51.4 million in 1997. This increase is
primarily a result of expenses related to our year 2000 project, which included
a worldwide assessment of our computer and embedded systems and the cost of
settling a substantial portion of pending DBCP claims. See "Description of
Business-Legal Proceedings".
ACQUISITION-RELATED EXPENSES
We incurred acquisition-related expenses of $4.0 million in the third
quarter of 1998 relating to the IAT transaction.
HURRICANE MITCH CHARGE
We recorded a special charge in the fourth quarter of 1998 of $26.5
million in asset write-offs and other costs, net of insurance proceeds received
as of February 18, 1999, due to damage incurred to our Guatemalan operations as
a result of flooding caused by Hurricane Mitch.
INTEREST EXPENSE
Interest expense decreased $15.4 million to $30.3 million in 1998
compared with $45.7 million in 1997, principally due to the repayment of $100
million principal amount of the 10% notes issued by FDP N.V., referred to as the
N.V. Notes, with proceeds from our initial public offering and the refinancing
of the remaining N.V. Notes with borrowings under our $389.0 million revolving
credit facility at lower interest rates.
OTHER INCOME, NET
Other income, net of $11.4 million in 1998 was $5.4 million higher than
the $6.0 million recorded in 1997 reflecting the proceeds from an insurance
claim and a reduction in currency exchange losses in 1998.
PROVISION FOR INCOME TAXES
Our effective income tax rate decreased from 17% in 1997 to 14% in 1998
primarily due to an increase in relative contribution to profit of our non-U.S.
operations, which are subject to a lower effective tax rate than our U.S.
operations. This was partially offset by an increase in the U.S. effective tax
rate.
37
<PAGE> 40
SEASONALITY
Our business is subject to seasonal fluctuations primarily attributable
to the relative availability of our principal products versus other competing
fresh fruits. Our net sales and gross profit generally are higher in the first
two quarters of the year when demand for bananas, deciduous fruit and melons is
at its highest level and competing fruit volumes are at their lowest level and
are being supplied to Northern Hemisphere markets largely from Southern
Hemisphere sources. These seasonal fluctuations are illustrated in the following
table, which presents certain unaudited quarterly financial information for the
periods indicated:
Year Ended
-----------------------
January 1, December 31,
1999 1999
-------- -----------
NET SALES:
First quarter .......... $ 369.2 $ 493.4
Second quarter ......... 473.9 476.2
Third quarter .......... 382.5 369.1
Fourth quarter ......... 374.5 404.5
-------- --------
TOTAL .............. $1,600.1 $1,743.2
======== ========
GROSS PROFIT:
First quarter .......... $ 35.4 $ 64.9
Second quarter ......... 99.0 54.2
Third quarter .......... 44.5 26.2
Fourth quarter ......... 15.8 5.3
-------- --------
TOTAL .............. $ 194.7 $ 150.6
======== ========
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for 1999 was $38.9 million, a
decrease of $25.1 million from 1998. The decrease in net cash provided by
operating activities is primarily attributable to an increase in inventory,
partially offset by an increase in depreciation and amortization.
Net cash provided by operating activities for 1998 was $64.0 million, a
decrease of $37.1 million from 1997. The decrease in net cash provided by
operating activities is primarily attributable to an increase in current assets
partially offset by write offs of fixed assets related to Hurricane Mitch and an
extraordinary loss on the early extinguishment of debt in 1998.
Net cash used by investing activities was $172.3 million for 1999,
$69.1 million for 1998 and $43.8 million for 1997. The use of cash for 1999,
1998 and 1997 was primarily attributable to capital expenditures and purchases
of subsidiaries.
Capital expenditures were $100.8 million for 1999, $53.8 million for
1998 and $36.0 million for 1997. Capital expenditures in 1999 were primarily for
expansion of our production and distribution facilities and the purchase of five
pre-owned refrigerated vessels. Capital expenditures in 1998 were primarily for
expansion of our production and distribution facilities and the purchase of two
pre-owned refrigerated vessels. Capital expenditures in 1997 were primarily for
the improvement of existing production and distribution facilities and the
purchase of a pre-owned refrigerated vessel.
38
<PAGE> 41
Purchase of subsidiaries, net of cash acquired, totaled $67.7 million
for 1999, $11.4 million for 1998 and $10.0 million for 1997. Purchase of
subsidiaries in 1999 was primarily for the acquisition of BMB, a Belgian
marketing company. Purchase of subsidiaries in 1998 was primarily for the
acquisition of a 62% interest in National Poultry Company PLC, a Jordanian
publicly traded company, engaged in the poultry business. Purchase of
subsidiaries in 1997 was in connection with the acquisition of the remaining 49%
minority interest in Horn-Linie, a shipping company that was previously an
unconsolidated subsidiary.
Net cash provided by financing activities for 1999 of $144.5 million
was primarily attributed to borrowing under our revolving credit facility. Net
cash used by financing activities for 1998 of $48.2 million was principally
attributed to net payments on short-term borrowings, the redemption of the
remaining N.V. Notes and the cash payment made as part of the IAT transaction,
partially offset by net proceeds from the issue of long-term debt under our
revolving credit facility. Cash used by financing activities for 1997 was $5.1
million, which consisted primarily of proceeds from our initial public offering
reduced by amounts used to purchase and retire a portion of the N.V. Notes and
to redeem our convertible preferred shares.
On May 19, 1998, FDP N.V. completed a tender offer to purchase the
remaining $200.0 million of the outstanding N.V. Notes and solicitation of
consents to certain proposed amendments to the indenture under which the N.V.
Notes were issued. We purchased $196.8 million of the N.V. Notes in the tender
offer, which we funded by a drawdown of $207.9 million under a revolving credit
facility. This revolving credit facility, which expires on May 19, 2003,
replaced our $100 million revolving credit facility. The remaining N.V. Notes
were redeemed during June 1998 at a redemption price of $1,050 for each $1,000
principal amount of N.V. Notes being redeemed, plus accrued interest to the date
of redemption. Completion of the tender offer and the redemption resulted in an
extraordinary charge of $18.1 million.
On December 15, 1998, the revolving credit facility was amended to
increase the borrowing level to $389.0 million and on May 20, 1999, the
revolving credit facility was amended again to increase the borrowing level to
$450.0 million. Under its terms, on each November 1 and May 1, the amount of the
revolving credit facility will be reduced by $10.8 million, commencing on
November 1, 1999. Outstanding borrowings at December 31, 1999 were $397.8
million, bearing interest at a weighted average interest rate of 8.41%. See
"Description of Business--Description of Revolving Credit Facility."
In connection with the revolving credit facility, we entered into an
interest rate swap agreement expiring in 2003 with Rabobank International in
order to limit the effect of the increase in interest rates on a portion of the
revolving credit facility. The nominal amount of the swap decreases over its
life from $150 million in the first three months to $53.6 million in the last
three months. The cash differentials paid or received on the swap agreement are
accrued and recognized as adjustments to interest expense. Interest expense
related to the swap agreement for 1999 and 1998 was $0.9 million and $0.7
million, respectively.
On October 29, 1997, we completed an initial public offering of
15,957,000 ordinary shares, at a public offering price of $16.00 per share. We
used the net proceeds of $175.3 million that we received from the offering (1)
to purchase and retire $100.0 million in aggregate principal amount of the
outstanding N.V. Notes, which resulted in an extraordinary charge of $10.4
million; and (2) to redeem all of our issued and outstanding convertible
preferred shares for approximately $68.5 million which included a redemption
premium of $19.6 million. We recorded the redemption premium as a reduction of
net income for purposes of computing net income applicable to ordinary
shareholders.
In addition to the $450.0 million revolving credit facility, we have
$14.6 million of working capital revolving credit facilities with various other
banks. These facilities expire at various dates starting on January 2000 and
bear interest rates ranging from 2.38% to 10%. At December 31, 1999, there were
$3.2 million of borrowings outstanding under these credit facilities.
At January 1, 1999 there were no borrowings outstanding under these credit
facilities.
39
<PAGE> 42
At December 31, 1999, we had $466.7 million in committed working
capital facilities, of which $59.6 million was available. The major portion of
these facilities is represented by the $450.0 million revolving credit facility.
At December 31, 1999, $6.0 million of available credit was applied towards the
issuance of letters of credit, of which $2.9 million was required under
agreements with the owners of vessels under long-term charter which expire
during the year 2000.
As of December 31, 1999, we had $500.9 million of long-term debt and
capital lease obligations, including the current portion, consisting of $397.8
million related to the revolving credit facility, $54.9 million of long-term
debt related to acquisitions in 1997 and 1998, $22.3 million of long-term debt
related to the acquisition of five used refrigerated vessels in 1999, $14.3
million of other long-term debt and $11.6 million of capital lease obligations.
On February 9, 2000, we entered into a revolving credit agreement with
Rabobank International, New York Branch, as agent. This revolving credit
agreement permits borrowings up to $25.0 million, bears interest at LIBOR plus
2.75% and terminates on August 9, 2000. The revolving credit agreement is
unsecured and contains covenants which require us to maintain certain minimum
financial ratios. There are no borrowings outstanding under this revolving
credit agreement as of the date hereof.
We believe that cash generated from operations and available borrowings
will be adequate to cover our cash needs during 2000. This belief is based
primarily on the additional borrowings available under our $450.0 million
revolving credit facility and our 2000 operating plans.
IMPACT OF YEAR 2000
In prior years, we discussed the nature and progress of our plans to
become Year 2000 ready. In late 1999, we completed our remediation and testing
of systems. As a result of our planning and implementation efforts, we did not
experience significant disruptions in our computer systems or embedded systems
and we believe those systems successfully responded to the Year 2000 date
change. Year 2000 costs related to software and hardware were capitalized. As of
December 31, 1999, we incurred costs of approximately $23.3 million (of which
approximately $18.9 million was capitalized and $4.4 million was expensed). We
are not aware of any material problems resulting from Year 2000 issues, either
with our computer systems, our embedded systems, or the products and services of
third parties. We will continue to monitor our computer systems and embedded
systems throughout the year 2000 to ensure that any latent Year 2000 matters
that may arise are addressed promptly.
OTHER
We are involved in several legal and environmental matters which, if
not resolved in our favor, could require significant cash outlays and could have
a material adverse effect on our results of operations, financial condition and
liquidity. See "Description of Business--Environmental Matters" and "Legal
Matters."
ITEM 9A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates and
currency exchange rates which may adversely affect our results of operations and
financial condition. We seek to minimize the risks from these interest rate and
currency exchange rate fluctuations through our regular operating and financing
activities and, when considered appropriate, through the use of derivative
financial instruments. Our policy is to not use financial instruments for
trading or other speculative purposes and is not to be a party to any leveraged
financial instruments.
40
<PAGE> 43
We manage market risk by restricting the use of derivative financial
instruments to hedging activities and by limiting potential interest and
currency rate exposures to amounts that are not material to our consolidated
results of operations and cash flows. We also have procedures to monitor the
impact of market risk on the fair value of long-term debt, short-term debt
instruments and other financial instruments, considering reasonably possible
changes in interest and currency rates.
EXCHANGE RATE RISK
Because we conduct our operations in many areas of the world involving
transactions denominated in a variety of currencies, our results of operations
as expressed in dollars may be significantly affected by fluctuations in rates
of exchange between currencies. These fluctuations could be significant.
Approximately 41% of our net sales in 1999 was received in currencies other than
the dollar. We generally are unable to adjust our non-dollar local currency
sales prices to reflect changes in exchange rates between the dollar and the
relevant local currency. As a result, changes in exchange rates between Deutsche
marks, Japanese yen, Italian lira or other currencies in which we receive sale
proceeds and the dollar have a direct impact on our operating results. In
addition, there is normally a time lag between our incurrence of sales and
collection of the related sales proceeds.
To seek to reduce currency exchange risk, we generally exchange local
currencies for dollars promptly upon receipt. Although we periodically enter
into currency forward contracts as a hedge against currency exposures, we may
not enter into these contracts during any particular period. While we have no
formal policy regarding our hedging strategies, our current practice is to enter
into only short-term, typically three-month, contracts relating to euro or yen.
As of December 31, 1999, we had $10.8 million (notional amount) of currency
forward contracts outstanding with an unrealized gain of $0.2 million.
The results of a uniform 10% strengthening in the value of the dollar
at January 2, 1999 relative to the currencies other than the dollar in which a
significant portion of our net sales and related costs are denominated would
result in a decrease in gross profit of approximately $20 million for the year
ending December 31, 1999. This calculation assumes that each exchange rate would
change in the same direction relative to the dollar. In addition to the direct
effects of changes in exchange rates quantified above, changes in exchange rates
also affect the volume of sales. Our sensitivity analysis of the effects of
changes in currency exchange rates does not factor in a potential change in
sales levels.
The above discussion of our procedures to monitor market risk and the
estimated changes in fair value resulting from our sensitivity analyses are
forward-looking statements of market risk assuming certain adverse market
conditions occur. Actual results in the future may differ materially from these
estimated results due to actual developments in the global financial markets.
The analysis methods we used to assess and mitigate risk discussed above should
not be considered projections of future events or losses.
INTEREST RATE RISK
We utilize primarily variable-rate debt as described in Note 12 of the
notes to our consolidated financial statements. We use an interest rate swap
agreement to limit our exposure under the revolving credit agreement to
short-term interest rate movements.
At December 31, 1999, our variable rate long-term debt had a carrying
value of $441.3 million. The fair value of the debt approximates the carrying
value because the variable rates approximate market rates. A 10% increase in the
period end interest rate would result in a negative impact of approximately $3.7
million on our results of operations.
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<PAGE> 44
At December 31, 1999, the notional amount of the interest rate swap
agreement was $117.9 million. The carrying value and fair value of the asset for
this agreement was zero and $1.5 million, respectively. Based upon a
hypothetical 10% increase in the period end market interest rate, the fair value
of this asset would increase by approximately $0.9 million.
These amounts are determined by considering the impact of the
hypothetical interest rates on our borrowing cost and the interest rate swap
agreement. These analyses do not consider the effects of the reduced level of
overall economic activity that could exist in such an environment. Further, in
the event of such a change, management would likely take actions to further
mitigate its exposure to the change. However, due to the uncertainty of the
specific actions that would be taken and their possible effects, the sensitivity
analysis assumes no changes in our financial structure.
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<PAGE> 45
ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT
The names and positions of our current executive officers and directors are as
follows:
<TABLE>
<CAPTION>
Name Position Current Position Held Since (1)
- ---- -------- -------------------------------
<S> <C> <C>
Mohammad Abu-Ghazaleh................... Chairman of the Board, Director and Chief December 20, 1996
Executive Officer
Hani El-Naffy........................... President, Director and Chief Operating December 20, 1996
Officer
John F. Inserra......................... Executive Vice President and Chief December 7, 1994
Financial Officer
M. Bryce Edmonson....................... Senior Vice President-North America January 4, 1997
Jean-Pierre Bartoli..................... Senior Vice President-Europe and Africa April 1, 1997
Randolph Breschini...................... Vice President-Asia Pacific May 19, 1998
Daniel W. Funk.......................... Senior Vice President-Production and December 5, 1995
Agricultural Services
Jose Antonio Yock....................... Senior Vice President - Central America July 20, 1994
Sergio Mancilla......................... Senior Vice President-Shipping Operations January 4, 1997
Marissa R. Tenazas...................... Vice President-Human Resources May 1, 1999
Zoltan Pinter........................... Vice President, General Counsel and July 16, 1999
Secretary
Amir Abu-Ghazaleh....................... Director December 20, 1996
Maher Abu-Ghazaleh...................... Director December 20, 1996
Marvin P. Bush.......................... Director January 8, 1998
Stephen L. Way.......................... Director January 8, 1998
John H. Dalton.......................... Director May 11, 1999
Edward L. Boykin........................ Director November 1, 1999
</TABLE>
- ----------
(1) Officers who held positions with us prior to December 20, 1996 held
those positions with FDP N.V.
MOHAMMAD ABU-GHAZALEH - CHAIRMAN OF THE BOARD, DIRECTOR AND CHIEF
EXECUTIVE OFFICER. Mr. Abu-Ghazaleh has served as the Chairman of our Board of
Directors and Chief Executive Officer since December 1996. He was also the
President and Chief Executive Officer of IAT Group Inc. Mr. Abu-Ghazaleh was
President and Chief Executive Officer of United Trading Company from 1986 to
1996. Prior to that time, he was General Manager for Metico (Dubai) from 1976 to
1986 and General Manager for Metico (Kuwait) from 1967 to 1975.
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<PAGE> 46
HANI EL-NAFFY - PRESIDENT, DIRECTOR AND CHIEF OPERATING OFFICER. Mr.
El-Naffy has served as our President, Director and Chief Operating Officer since
December 1996. Prior to that time, he served as Executive Director for United
Trading Company from 1986 until December 1996. From 1976 to 1986, he was the
President/General Manager of T.C.A. Shipping.
JOHN F. INSERRA - EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER.
Mr. Inserra has served as our Executive Vice President and Chief Financial
Officer since December 1994. In April 1993, he was named our Controller and in
July 1994, he became our Vice President and Controller. Between 1989 and April
1993, Mr. Inserra was the Controller of Del Monte Tropical Fruit Company.
M. BRYCE EDMONSON -- SENIOR VICE PRESIDENT-NORTH AMERICA. Mr. Edmonson
has served as Senior Vice President-North America since January 1997. Prior to
that time, he was Vice President-Sales & Marketing for North America from
September 1995 to January 1997, and Director of Del Monte melon operations from
1990 to 1995. From 1987 to 1990, Mr. Edmonson was our Director of North American
Product Management.
JEAN-PIERRE BARTOLI -- SENIOR VICE PRESIDENT-EUROPE AND AFRICA. Mr.
Bartoli has served as Senior Vice President-Europe & Africa since April 1997.
Prior to that time, he served as Financial Director for the European/African
region from 1990 to 1997. Mr. Bartoli held various financial positions in our
European operations from 1983 to 1990.
RANDOLPH BRESCHINI -- VICE PRESIDENT-ASIA PACIFIC. Mr. Breschini has
served as Vice President-Asia Pacific since March 1998. Prior to that time, he
was the Chief Executive Officer and General Manager for the California 38th
District Agricultural Association from 1997 to 1998 and General Manager for Hunt
Wesson, Inc. from 1994 to 1996. From 1984 to 1994, Mr. Breschini held various
senior operational management positions with Dole Fruit Company.
DANIEL W. FUNK-- SENIOR VICE PRESIDENT-PRODUCTION AND AGRICULTURAL
SERVICES. Dr. Funk has served as Senior Vice President-Production and
Agricultural Services since December 1995. He has been with us since 1984 and
has held various positions in production, agricultural services, research and
development. Prior to joining us, Dr. Funk was employed by Diamond Shamrock from
1980 to 1984 as Director for Research and Development/Product Development. From
1973 to 1980, he served as Director for Research and Development and
Agricultural Production for United Fruit Company.
JOSE ANTONIO YOCK -- SENIOR VICE PRESIDENT-CENTRAL AMERICA. Mr. Yock
has served as Senior Vice President-Central and South America since July 1994.
Prior to that time, he was Vice President-Finance for the Latin American region
from June 1992 to July 1994. Mr. Yock joined Fresh Del Monte in April 1982 and
has served in several financial management positions.
SERGIO MANCILLA -- SENIOR VICE PRESIDENT-SHIPPING OPERATIONS. Mr.
Mancilla has served as Senior Vice President-Shipping Operations since January
1997. Prior to that time, he was General Manager for Maritima Altisol, Ltd. from
October 1990 to December 1996. From January 1981 through October 1990, Mr.
Mancilla worked with several Chilean companies as Master Officer.
MARISSA R. TENAZAS -- VICE PRESIDENT-HUMAN RESOURCES. Ms. Tenazas has
served as Vice President-Human Resources since May 1, 1999. From December 1996
to April 1999, she served as Senior Director Human Resources. From 1989 to 1996,
she served as Personnel Manager for Suma Fruit International (USA), Inc. Prior
to that time, Ms. Tenazas held various management positions for companies in
Manila, Philippines.
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<PAGE> 47
ZOLTAN PINTER -- VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY. Mr.
Pinter has served as Vice President, General Counsel and Secretary since July
16, 1999. From 1998 to 1999, Mr. Pinter served as Associate General Counsel and
Assistant Secretary. Prior to joining Fresh Del Monte, he served as General
Counsel and Secretary for IAT Group Inc. from 1997 to 1998. From 1994 to 1997,
Mr. Pinter was a senior associate with Adorno & Zeder, P.A and an associate with
Popham Haik Schnobrich and Kaufman, Ltd. from 1991 to 1994. From 1989 to 1991,
Mr. Pinter worked as a law clerk including a clerkship for the Honorable Thomas
E. Scott, United States District Court Judge for the Southern District of
Florida. From 1983 to 1989, Mr. Pinter held various positions with big five
accounting firms.
AMIR ABU-GHAZALEH -- DIRECTOR. Mr. Abu-Ghazaleh has served as Director
since December 1996. He is currently the General Manager for Abu-Ghazaleh
International Company and has held this position since April 1987. He has also
served as the General Manager for Ahmed Abu-Ghazaleh & Sons Company since April
1979. From 1987 to April 1995, Mr. Abu-Ghazaleh was employed by Metico (Dubai)
as General Manager.
MAHER ABU-GHAZALEH -- DIRECTOR. Mr. Abu-Ghazaleh has served as Director
since December 1996. He is presently the Managing Director of Suma International
General Trading and Contracting Company. Prior to this, he served as the General
Manager of Metico (Kuwait) from 1975 to 1995, and as its Commercial Manager from
1971 to 1975.
MARVIN P. BUSH -- DIRECTOR. Mr. Bush was appointed to the Board of
Directors on January 8, 1998. He is a co-founder and the Managing Director of
Winston Partners Group, a private investment firm based in Vienna, Virginia. He
is also Managing General Partner of Winston Growth Fund, L.P., Winston
International Growth Fund, L.P., Winston Small Cap Growth Fund, L.P., and a
series of private equity investment partnerships. Mr. Bush also serves on the
Board of Directors of Kerrco, Inc. and HCC Insurance Holdings, Inc.
STEPHEN L. WAY -- DIRECTOR. Mr. Way was appointed to the Board of
Directors on January 8, 1998. He is the Chairman and Chief Executive Officer of
HCC Insurance Holdings, Inc., a New York Stock Exchange company which he founded
in 1974.
JOHN H. DALTON -- DIRECTOR. Mr. Dalton was appointed to the Board of
Directors on May 11, 1999. He is now Chairman and Chief Executive Officer of
Metal Technology, Inc. He has held three presidential appointments. Most
recently he served as Secretary of the Navy from July 1993 through November
1998. Prior to serving as Secretary of the Navy he served as a member and
chairman of the Federal Home Loan Bank Board from December 1979 through July
1981. Before being appointed to the Bank Board Mr. Dalton held the position of
President of the Government National Mortgage Association of the U.S. Department
of Housing and Urban Development from April 1977 through April 1979. Mr. Dalton
also serves on the Board of Directors of Niagra Mohawk Holdings, Inc., Trans
Technology, Inc., Metal Technology, Inc. and the Cantor Exchange and IPC
Photonics Corp.
EDWARD L. BOYKIN -- DIRECTOR. Mr. Boykin was appointed to the Board of
Directors on November 1, 1999. Following a 30-year career with Deloitte & Touche
LLP., Mr. Boykin retired in 1991 and is currently a private consultant and
serves on several corporate boards.
Mr. Mohammad Abu-Ghazaleh, Mr. Amir Abu-Ghazaleh and Mr. Maher
Abu-Ghazaleh are brothers and, together with other members of the Abu-Ghazaleh
family, are shareholders of IAT Group Inc, our principal shareholder (See -
Control of Registrant). The Abu-Ghazaleh's are brothers and control the
registrant. There are no other family relationships among any of the directors
or executive officers.
Our board of directors is divided into three classes, as nearly equal
in number as possible, with each Director serving a three-year term and one
class being elected at each year's annual general meeting of shareholders. Mr.
Dalton and Mr. Boykin are up for appointment, confirmation and ratification at
the 2000 annual general meeting of our shareholders. Mr. Mohammad Abu-Ghazaleh,
Mr. Hani El-Naffy and
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<PAGE> 48
Mr. Dalton are in the class of directors whose term expires at the 2000 annual
general meeting of our shareholders. Mr. Amir Abu-Ghazaleh, Mr. Way and Mr.
Boykin are in the class of directors whose term expires at the 2001 annual
general meeting of our shareholders. Mr. Maher Abu-Ghazaleh and Mr. Bush are in
the class of directors whose term expires at the 2002 annual general meeting of
our shareholders. At each annual general meeting of our shareholders, successors
to the class of directors whose term expires at such meeting will be elected to
serve for three-year terms and until their successors are elected and qualified.
Executive officers are appointed by, and serve at the discretion of,
our board of directors.
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
The aggregate compensation expense accrued by Fresh Del Monte Produce
Inc. and its subsidiaries with respect to services rendered by all directors and
executive officers of Fresh Del Monte Produce Inc. as a group during 1999 was
$4.8 million. This amount includes the expense attributable to an incentive
payment made annually under an agreement. Under the agreement, the annual
incentive payment is equal to the sum of (1) 2% of the amount, up to $20
million, of our consolidated net income and (2) 1-1/2% of the amount of our
consolidated net income above $20 million.
During 1999, we contributed or accrued an aggregate of $30,100 for the
accounts of our executive officers under an incentive savings and security plan
(the "Savings Plan"). The Savings Plan is a defined contribution pension plan
that is qualified under Section 401(k) of the Internal Revenue Code of 1986. We
make matching contributions for the accounts of participants in the Savings Plan
generally equal to 50% of the contributions made by each such participant to the
Savings Plan up to 6% of an employee's compensation. We also maintain certain
tax-qualified defined benefit pension plans and supplemental non-qualified
defined benefit pension plans.
Our board of directors has established a compensation committee and an
audit committee whose members are comprised solely of directors independent of
our management. The compensation committee will establish salaries, incentives
and other forms of compensation for our directors and officers and will
recommend policies relating to our benefit plans. The audit committee will
oversee the engagement of our independent auditors and, together with our
independent auditors, will review our accounting practices, internal accounting
controls and financial results.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
Effective immediately prior to the closing of our initial public
offering in October 1997, we adopted the 1997 Share Incentive Plan (the "1997
Plan") which provides for options to purchase an aggregate of 2,380,030 ordinary
shares to be granted to non-employee directors and employees of Fresh Del Monte
and its subsidiaries who are largely responsible for the management, growth and
protection of the business of Fresh Del Monte and its subsidiaries ("eligible
persons") in order to provide the eligible persons with incentives to continue
with Fresh Del Monte and to attract personnel with experience and ability. On
May 11, 1999, our shareholders approved and ratified and our Board of Directors
adopted the 1999 Share Incentive Plan (the "1999 Plan), which provides for
options to purchase and aggregate of 2,000,000 ordinary shares to be granted to
eligible persons. Each option has an exercise price per share equal to the fair
market value of an ordinary share on the grant date, became exercisable with
respect to 20% of the ordinary shares subject to the option on the date of grant
and will become exercisable with respect to an additional 20% of the shares on
each of the next four anniversaries of such date and will terminate ten years
after the date of grant (unless earlier terminated under the terms of the 1997
Plan).
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<PAGE> 49
The following table shows the options for ordinary shares outstanding
as of March 23, 2000 under the 1997 and 1999 Plans:
<TABLE>
<CAPTION>
NUMBER OF OPTIONS
OUTSTANDING EXERCISE PRICE PER SHARE EXPIRATION DATE
----------------- ------------------------ ---------------
<S> <C> <C>
1,096,000 $16.00 October 2007
60,000 $14.21875 January 2008
495,000 $15.6875 March 2009
30,000 $8.375 November 2009
1,427,000 $9.2813 November 2009
120,000 $7.875 March 2010
</TABLE>
As of March 23, 2000, our directors and executive officers, as a group, held
options to purchase an aggregate of 875,000 ordinary shares under the 1997 Plan
and the 1999 Plans.
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
In the past, we have engaged in and may continue to engage in
transactions with our directors, officers, principal shareholders and their
respective affiliates. The terms of these transactions are typically negotiated
by one or more of our employees who are not related parties using the same model
agreements and business parameters that apply to our third-party transactions
generally.
On November 25, 1998, we acquired a 62% majority interest in National
Poultry, a publicly traded company in Jordan, engaged in the poultry business. A
portion of the acquired shares were purchased from members of the Abu-Ghazaleh
family for a total purchase price of $4.5 million, based on a fairness opinion
from an independent party.
In September 1998, we acquired 14 operating subsidiaries of IAT Group
Inc. for six million ordinary shares, $25.0 million in cash and the assumption
of indebtedness of $130.0 million.
In connection with the IAT transaction, our board of directors
established a special committee comprised of disinterested outside directors to
evaluate and negotiate at arm's-length the terms of the acquisition. The special
committee retained its own legal and financial advisors and unanimously approved
the transaction. Additionally, at a special meeting of our shareholders held to
consider the acquisition, a substantial majority of our public shareholders
(excluding our controlling shareholders) voted to approve the acquisition.
Because our Articles of Association and Cayman Islands law required that holders
of a majority of all of the outstanding approve the acquisition, the members of
the Abu-Ghazaleh family, rather than abstaining from voting, voted the shares
beneficially owned by them for and against the acquisition in the same
proportion that all other shares were voted.
REGISTRATION RIGHTS AGREEMENT
Under a registration rights agreement between us and FG Holdings
Limited, a subsidiary of IAT Group Inc. ("FG Holdings"), which became effective
upon the consummation of our initial public offering, we granted FG Holdings and
its affiliates the right, subject to the terms and conditions set forth in the
agreement, to require us to register ordinary shares and certain other shares
that we may issue from time to time held by them (the "Registrable Securities")
for sale in accordance with their intended method of disposition thereof (a
"demand registration"). The holders of a majority of the Registrable Securities
may request one demand registration per year, subject to certain limitations. We
also granted FG Holdings and its affiliates the right, subject to certain
exceptions, to participate in registrations of shares initiated by us on our own
behalf or on behalf of any other shareholder (a "piggy-back registration"). All
of the rights under this agreement were assigned from FG Holdings to the
Principal Shareholders in January 1999. FG Holdings was subsequently dissolved.
47
<PAGE> 50
The registration rights agreement provides that to the extent not
inconsistent with applicable law, no holder of Registrable Securities will
effect any public sale or distribution of any of our Registrable Securities, or
any securities convertible into or exchangeable or exercisable for such
Registrable Securities, during the seven days prior to and the 90 days after any
registration statement relating to the Registrable Securities has become
effective, except as part of such registration statement, if requested by us or
the managing underwriter or underwriters of the offering. In addition, we have
agreed not to effect any public sale or distribution of our Registrable
Securities or securities convertible into or exchangeable or exercisable for any
of the Registrable Securities during the seven days prior to and the 90 days
after any registration statement relating to the Registrable Securities has
become effective, except as part of the registration statement or pursuant to
registration statements relating to employee benefit plans and certain other
offerings.
We are required to pay expenses (other than underwriting discounts and
commissions) incurred by the Principal Shareholders in connection with demand
and piggy-back registrations. The registration rights agreement contains
indemnification and contribution provisions from us for the benefit of the
Principal Shareholders and its permitted assigns and related persons. The rights
of the Principal Shareholders under the registration rights agreement will
terminate if the Principal Shareholders cease to own at least 5% of the
outstanding stock of Fresh Del Monte Produce Inc.
PART II
ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED
Not applicable.
PART III
ITEM 15. DEFAULTS UPON SENIOR SECURITIES
As of the date hereof, neither Fresh Del Monte Produce Inc. nor any of
its significant subsidiaries (exceeding five percent of the total assets of the
Company) is in default under any instrument governing any indebtedness of Fresh
Del Monte Produce Inc. or such subsidiaries, respectively.
ITEM 16. CHANGES IN SECURITIES, CHANGES IN SECURITY FOR REGISTERED
SECURITIES AND USE OF PROCEEDS
Not applicable.
PART IV
ITEM 17. FINANCIAL STATEMENTS
The Company's Consolidated Financial Statements have been prepared in
accordance with Item 18 hereof.
ITEM 18. FINANCIAL STATEMENTS
The Company's financial statements and schedule set forth in the
accompanying Index to Consolidated Financial Statements and Supplemental
Financial Statement Schedule included in this report following Part IV beginning
on pages F-1 and S-1, respectively, are hereby incorporated herein by this
reference. Such consolidated financial statements and schedule are filed as part
of this report.
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<PAGE> 51
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS
Index to Consolidated Financial Statements and Supplemental Financial
Statement Schedules.
<TABLE>
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Certified Public Accountants........................ F-1
Consolidated Balance Sheets at December 31, 1999 and January 1, 1999........................ F-2
Consolidated Statements of Income for the years ended December 31, 1999,
January 1, 1999 and December 26, 1997...................................................... F-4
Consolidated Statements of Cash Flows for the years ended December 31, 1999,
January 1, 1999, and December 26, 1997..................................................... F-5
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1999, January 1, 1999, and December 26, 1997.................................... F-7
Notes to Consolidated Financial Statements................................................... F-8
SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULE
Report of Ernst & Young LLP, Independent Certified Public Accountants......................... S-1
Schedule II - Valuation and Qualifying Accounts............................................... S-2
</TABLE>
Exhibits
- --------
2.1 Fourth Amendment and Consent dated as of May 1999 among Del Monte
Fresh Produce (UK) Ltd., Wafer Limited, Del Monte Fresh Produce
International Inc., Del Monte Fresh Produce N.A., Inc., Fresh Del
Monte Produce Inc., Global Reefer Carriers, Ltd., the banks,
financial institutions and other institutional lenders a party to
the Revolving Credit Agreement dated as of May 19, 1998.
2.2 Fifth Amendment and Consent dated as of May 1999 among Del Monte
Fresh Produce (UK) Ltd., Wafer Limited, Del Monte Fresh Produce
International Inc., Del Monte Fresh Produce N.A., Inc., Fresh Del
Monte Produce Inc., Global Reefer Carriers, Ltd., the Increasing
Lenders therein and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York
Branch, as agent for the other banks, financial isntitutions and
other institutional lenders a party to the Revolving Credit
Agreement dated as of May 19, 1998.
2.3 Sixth Amendment and Consent dated as of June 1999 among Del Monte
Fresh Produce (UK) Ltd., Wafer Limited, Del Monte Fresh Produce
International Inc., Del Monte Fresh Produce N.A., Inc., Fresh Del
Monte Produce Inc., Global Reefer Carriers, Ltd., the Increasing
Lenders therein and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York
Branch, as agent for the other banks, financial isntitutions and
other institutional lenders a party to the Revolving Credit
Agreement dated as of May 19, 1998.
2.4 Seventh Amendment and Consent dated as of July 1999 among Del
Monte Fresh Produce (UK) Ltd., Wafer Limited, Del Monte Fresh
Produce International Inc., Del Monte Fresh Produce N.A., Inc.,
Fresh Del Monte Produce Inc., Global Reefer Carriers, Ltd., the
Increasing Lenders therein and Cooperatieve Centrale
49
<PAGE> 52
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York
Branch, as agent for the other banks, financial isntitutions and
other institutional lenders a party to the Revolving Credit
Agreement dated as of May 19, 1998.
2.5 Acquisition Agreement dated as of December 23, 1998, among Fresh
Del Monte Produce N.V. and Bacori Corporation and Banafruit Ltd.
2.6 1999 Share Incentive Plan effective as of May 11, 1999.
2.7 Consent of Ernst & Young LLP
3.1 List of Parents and Subsidiaries
50
<PAGE> 53
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this Annual Report on Form 20-F or amendments
thereto to be signed on its behalf by the undersigned, thereunto duly
authorized.
FRESH DEL MONTE PRODUCE INC.
Date: March 24, 2000 By: /s/ HANI EL-NAFFY
--------------------------------------
Hani El-Naffy
President and Chief Operating Officer
By: /s/ JOHN F. INSERRA
--------------------------------------
John F. Inserra
Executive Vice President and
Chief Financial Officer
51
<PAGE> 54
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Fresh Del Monte Produce Inc.
We have audited the accompanying consolidated balance sheets of Fresh Del Monte
Produce Inc. and subsidiaries as of December 31, 1999 and January 1, 1999, and
the related consolidated statements of income, cash flows and shareholders'
equity for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Fresh Del Monte
Produce Inc. and subsidiaries at December 31, 1999 and January 1, 1999, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Miami, Florida
February 14, 2000
F-1
<PAGE> 55
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in millions)
<TABLE>
<CAPTION>
December 31, January 1,
1999 1999
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 31.2 $ 32.8
Trade accounts receivable, net of allowance of $9.9 and
$8.5, respectively 136.4 112.7
Advances to growers and other receivables, net of allowance
of $4.5 and $2.6, respectively 52.3 55.5
Inventories 198.9 159.8
Prepaid expenses and other current assets 13.4 35.1
-------- --------
Total current assets 432.2 395.9
-------- --------
Investments in unconsolidated companies 51.9 55.7
Property, plant and equipment, net 590.6 503.5
Other noncurrent assets 62.1 29.8
Goodwill, net of accumulated amortization of $5.9 and $3.2,
respectively 79.4 49.1
-------- --------
Total assets $1,216.2 $1,034.0
======== ========
</TABLE>
See accompanying notes
F-2
<PAGE> 56
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED BALANCE SHEETS (continued)
(U.S. dollars in millions, except per share data)
<TABLE>
<CAPTION>
December 31, January 1,
1999 1999
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 3.2 $ --
Accounts payable and accrued expenses 195.2 194.8
Current portion of long-term debt and capital lease
obligations 24.9 17.2
Income taxes payable 5.2 6.7
-------- --------
Total current liabilities 228.5 218.7
-------- --------
Long-term debt 467.7 327.3
Capital lease obligations 8.3 9.7
Retirement benefits 53.9 67.4
Other noncurrent liabilities 8.7 8.6
Deferred income taxes 11.3 5.3
Deferred credit vessel leases -- 2.9
Minority interest 12.0 11.6
-------- --------
Total liabilities 790.4 651.5
-------- --------
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 107.1 57.8
Accumulated other comprehensive loss (8.9) (2.9)
-------- --------
Total shareholders' equity 425.8 382.5
-------- --------
Total liabilities and shareholders' equity $1,216.2 $1,034.0
======== ========
</TABLE>
See accompanying notes
F-3
<PAGE> 57
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED STATEMENTS OF INCOME
(U.S. dollars in millions, except per share data)
<TABLE>
<CAPTION>
Year Ended
-------------------------------------------------------
December 31, January 1, December 26,
1999 1999 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Net sales $ 1,743.2 $ 1,600.1 $ 1,452.4
Cost of products sold 1,592.6 1,405.4 1,288.7
-------------- -------------- --------------
Gross profit 150.6 194.7 163.7
Selling, general and administrative expenses 63.5 58.3 51.4
Amortization of goodwill 2.6 1.7 1.5
Acquisition related expenses -- 4.0 --
Hurricane Mitch charge -- 26.5 --
-------------- -------------- --------------
Operating income 84.5 104.2 110.8
Interest expense 30.2 30.3 45.7
Interest income 2.6 4.3 5.6
Other income, net 14.7 11.4 6.0
-------------- -------------- --------------
Income before provision for income taxes and
extraordinary item 71.6 89.6 76.7
Provision for income taxes 14.7 12.2 13.1
-------------- -------------- --------------
Income before extraordinary item 56.9 77.4 63.6
Extraordinary charge on early extinguishment of debt -- 18.1 10.4
-------------- -------------- --------------
Net income 56.9 59.3 53.2
Redemption premium, dividends and accretion on
Convertible Preferred Shares -- -- (22.5)
-------------- -------------- --------------
Net income applicable to ordinary shareholders $ 56.9 $ 59.3 $ 30.7
============== ============== ==============
Basic and diluted per share income applicable to
ordinary shareholders:
Before extraordinary item $ 1.06 $ 1.44 $ 0.94
Extraordinary charge $ -- $ (0.34) $ (0.24)
Net income $ 1.06 $ 1.10 $ 0.70
Weighted average number of ordinary shares outstanding:
Basic 53,763,600 53,632,656 43,765,188
Diluted 53,805,237 53,774,831 43,765,188
</TABLE>
See accompanying notes
F-4
<PAGE> 58
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in millions)
<TABLE>
<CAPTION>
Year Ended
-----------------------------------------
December 31, January 1, December 26,
1999 1999 1997
------------ ---------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 56.9 $ 59.3 $ 53.2
Adjustments to reconcile net income to cash provided
by operating activities:
Goodwill amortization 2.6 1.7 1.5
Depreciation and amortization other than
goodwill 42.6 34.1 30.2
Deferred credit vessel leases (4.8) (3.9) (3.0)
Equity in earnings of unconsolidated companies,
net of dividends 2.1 (3.6) (4.6)
Extraordinary charge on early extinguishment of
debt -- 18.1 10.4
Write-off of fixed assets related to Hurricane
Mitch -- 18.8 --
Gain on insurance proceeds related to Hurricane
Mitch (13.5) -- --
Deferred income taxes 6.4 1.4 (1.9)
Other, net 2.0 0.1 3.5
Changes in operating assets and liabilities:
Receivables (22.9) (31.6) 1.3
Inventories (40.3) (22.8) (6.9)
Accounts payable and accrued expenses (1.6) 17.7 10.4
Prepaid expenses and other current assets 21.6 (20.9) 2.4
Other noncurrent assets and liabilities (12.2) (4.4) 4.6
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES
38.9 64.0 101.1
INVESTING ACTIVITIES:
Capital expenditures (100.8) (53.8) (36.0)
Capital expenditures due to Mitch, net of insurance
proceeds (2.8) -- --
Proceeds on sale of assets 0.1 4.6 5.7
</TABLE>
See accompanying notes
F-5
<PAGE> 59
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(U.S. dollars in millions)
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, JANUARY 1, DECEMBER 26,
1999 1999 1997
------------ --------- ------------
<S> <C> <C> <C>
INVESTING ACTIVITIES (CONTINUED):
Purchase of subsidiaries, net of cash acquired $ (67.7) $ (11.4) $ (10.0)
Other investing activities, net (1.1) (8.5) (3.5)
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (172.3) (69.1) (43.8)
FINANCING ACTIVITIES:
Proceeds from issuance of ordinary shares -- 2.6 175.3
Proceeds from long-term debt 321.6 433.5 31.4
Payments on long-term debt (181.4) (412.7) (124.0)
Proceeds from short-term borrowings 10.6 211.5 7.0
Payments on short-term borrowings (5.9) (261.8) (18.2)
Dividend paid in connection with the IAT transaction -- (25.0) --
Redemption of Convertible Preferred Shares -- -- (68.5)
Other, net (0.4) 3.7 (8.1)
-------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 144.5 (48.2) (5.1)
Effect of exchange rate changes on cash and cash
equivalents (4.5) 0.4 1.1
-------- -------- --------
Cash and cash equivalents:
Net change 6.6 (52.9) 53.3
Beginning balance 32.8 85.7 32.4
Net cash change due to change in year end of
subsidiaries (8.2) -- --
-------- -------- --------
Ending balance $ 31.2 $ 32.8 $ 85.7
======== ======== ========
SUPPLEMENTAL NON-CASH ACTIVITIES:
Capital lease obligations for new assets $ 2.5 $ 10.3 $ 4.3
======== ======== ========
</TABLE>
See accompanying notes
F-6
<PAGE> 60
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(U.S. dollars in millions)
<TABLE>
<CAPTION>
Accumulated
Ordinary Other Total
Shares Ordinary Paid-in Retained Comprehensive Shareholders'
Outstanding Shares Capital Earnings Income (Loss) Equity
----------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 27, 1996 41,862,600 $ 0.4 $129.4 $ 17.0 $ 0.2 $147.0
Issuance of ordinary shares, net
of offering expenses of $1.7 11,738,000 0.1 175.2 -- -- 175.3
Capital contributions -- -- 3.4 -- -- 3.4
Retained earnings capitalized -- -- 3.7 (3.7) -- --
Dividend -- -- -- (11.7) -- (11.7)
Redemption premium, dividends and
accretion on Convertible
Preferred Shares -- -- -- (22.5) -- (22.5)
Comprehensive income:
Net income -- -- -- 53.2 -- 53.2
Currency translation adjustment -- -- -- -- (1.9) (1.9)
------
Comprehensive income 51.3
---------- ------ ------ ------ ------ ------
Balance at December 26, 1997 53,600,600 0.5 311.7 32.3 (1.7) 342.8
Capital contributions -- -- 8.0 -- -- 8.0
Issuance of ordinary shares upon
exercise of stock options 163,000 -- 2.6 -- -- 2.6
Dividend -- -- -- (4.0) -- (4.0)
Dividend paid in connection with
the IAT transaction -- -- 4.8 (29.8) -- (25.0)
Comprehensive income:
Net income -- -- -- 59.3 -- 59.3
Currency translation adjustment -- -- -- -- (1.2) (1.2)
------
Comprehensive income 58.1
---------- ------ ------ ------ ------ ------
Balance at January 1, 1999 53,763,600 0.5 327.1 57.8 (2.9) 382.5
Net loss of IAT for the three
month period ended January 1,
1999 -- -- -- (7.6) -- (7.6)
Comprehensive income:
Net income -- -- -- 56.9 -- 56.9
Unrealized loss on
available-for-sale marketable
securities -- -- -- -- (3.7) (3.7)
Currency translation adjustment -- -- -- -- (2.3) (2.3)
------
Comprehensive income 50.9
---------- ------ ------ ------ ------ ------
Balance at December 31, 1999 53,763,600 $ 0.5 $327.1 $107.1 $ (8.9) $425.8
========== ====== ====== ====== ====== ======
</TABLE>
See accompanying notes
F-7
<PAGE> 61
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 Agricola Empresarial 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 and was
initially capitalized by the sale of 35,862,600 ordinary shares for $68.9
million.
On September 17, 1998, Fresh Del Monte acquired 14 wholly owned operating
companies from IAT Group Inc. and its shareholders (collectively, such companies
are known as IAT and their acquisition is known as the IAT transaction). At the
time of the IAT transaction, IAT Group Inc. owned approximately 86% of FG
Holdings Limited, which in turn owned approximately 63% of Fresh Del Monte. As a
result, the IAT transaction has been accounted for as a combination of entities
under common control using the as if pooling of interests method of accounting.
The consideration given in the IAT transaction consisted of $25.0 million in
cash, the assumption of existing debt of approximately $130.0 million and the
issuance to companies controlled by the Abu-Ghazaleh family of six million of
Fresh Del Monte's ordinary shares. IAT had operations in Chile, the United
States, the Netherlands and Uruguay. IAT was a private international grower and
exporter of primarily deciduous fresh fruit and vegetables.
Under the as if pooling of interests method of accounting, the historical
results of Fresh Del Monte have been restated to combine the operations of Fresh
Del Monte and IAT for all periods subsequent to August 29, 1996, the date Fresh
Del Monte and IAT came under common control. The recorded assets and liabilities
of Fresh Del Monte and IAT have been carried forward to Fresh Del Monte's
consolidated financial statements at their historical amounts. Consolidated
earnings of Fresh Del Monte include the earnings of Fresh Del Monte and IAT for
all periods subsequent to the date Fresh Del Monte and IAT came under common
control.
F-8
<PAGE> 62
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1. GENERAL (CONTINUED)
Combined and separate net sales and net income of Fresh Del Monte and IAT for
1997 is presented in the following table (U.S. dollars in millions, except per
share data):
Net sales
Fresh Del Monte $ 1,208.4
IAT 248.6
Elimination (4.6)
---------
Combined $ 1,452.4
=========
Net income
Fresh Del Monte $ 43.8
IAT 9.4
---------
Combined $ 53.2
=========
Basic and diluted per share income applicable to ordinary
shareholders:
Fresh Del Monte
Before extraordinary item $ 0.72
Extraordinary charge $ (0.24)
Net income $ 0.48
IAT $ 0.22
Combined $ 0.70
In connection with the IAT transaction, Fresh Del Monte incurred $4.0 million of
acquisition expenses which were expensed in 1998. Acquisition expenses include
professional, legal, accounting and other fees.
Prior to January 2, 1999, IAT's fiscal year end was September 30. Effective
January 2, 1999, IAT's fiscal year end was changed to conform to Fresh Del
Monte's fiscal year end. As a result of this change in fiscal year ends, the
year ended December 31, 1999 reflects the operating results of Fresh Del Monte
and subsidiaries, including IAT, for the same months. The results of operations
for IAT for the period from October 1, 1998 to January 1, 1999 are not included
in the consolidated statements of income or cash flows for any of the periods
presented, but are reflected as an adjustment to retained earnings as of January
2, 1999. For the period from October 1, 1998 to January 1, 1999, IAT incurred a
net loss of $7.6 million.
On December 20, 1996, Fresh Del Monte directly and through its wholly-owned
subsidiary, FDM Holdings, acquired ownership and control of all of the
outstanding shares of FDP N.V. and GRC pursuant to the Share Purchase Agreement
(the FDP/GRC Acquisition).
F-9
<PAGE> 63
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1. GENERAL (CONTINUED)
The total equity purchase consideration in the FDP/GRC Acquisition consisted of
approximately $61.7 million in cash, the issuance by Fresh Del Monte of 55,000
Series 1 Convertible Preferred Shares, each with a par value of $.01 and an
initial liquidation preference of $1,000 per share (the Convertible Preferred
Shares), with an aggregate assigned fair value of $46.0 million, to GEAM, which
was the seller of the shares of FDP N.V. and GRC, and $7.2 million of
acquisition costs incurred. In addition, at the time of the FDP/GRC Acquisition,
FDP N.V. and GRC had liabilities totaling approximately $544.0 million.
The FDP/GRC Acquisition was accounted for as a purchase and, accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed
based on appraisals and other estimates of their underlying fair values.
Fresh Del Monte and its subsidiaries are engaged primarily in the worldwide
production, transportation and marketing of fresh produce. Fresh Del Monte and
its subsidiaries source their products (bananas and other fresh fruit and
vegetables which includes pineapples, deciduous fruit, melons and other fresh
produce) from 13 locations in North and Latin America, the Asia Pacific region
and Africa and distribute their products in North America, Europe, the Asia
Pacific region and Latin America. Products are sourced from company-owned farms,
through joint venture arrangements and through supply contracts with independent
growers.
GRC and its subsidiaries are primarily engaged in the maritime transportation on
refrigerated vessels of fresh fruit and other produce, principally for FDP N.V.
Through December 23, 1997, a German subsidiary had a non-controlling 51%
interest in Horn-Linie OHg (Horn-Linie), a partnership organized under the laws
of Germany engaged in shipping activities. On December 23, 1997, Fresh Del Monte
acquired the remaining 49% minority interest in Horn-Linie (see Note 3). GRC
also has a non-controlling 80% limited partnership interest in Internationale
Fruchtimport Gesellschaft Weichert & Co. (Interfrucht), a limited partnership
organized under the laws of Germany engaged in the distribution of fresh fruit
and other produce, principally for FDP N.V., in Germany and other Northern
European countries.
On October 29, 1997, Fresh Del Monte sold, in an initial public offering,
11,738,000 ordinary shares, at a public offering price of $16.00 per share (the
Initial Public Offering), resulting in net proceeds to Fresh Del Monte of $175.3
million. Of the net proceeds, approximately $106.5 million was used to purchase
and retire $100.0 million in aggregate principal amount of the outstanding 10%
notes due 2003 (the N.V. Notes) issued by FDP N.V., which resulted in an
extraordinary loss of $10.4 million. Of the net proceeds, approximately $68.5
million was used to redeem all the issued and outstanding Convertible Preferred
Shares issued to GEAM in the FDP/GRC Acquisition which included a redemption
premium of approximately $19.6 million. Fresh Del Monte recorded the redemption
premium as a reduction of 1997 net income for purposes of computing net income
applicable to ordinary shareholders.
F-10
<PAGE> 64
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Fresh Del Monte
and its majority owned subsidiaries which Fresh Del Monte controls. Fresh Del
Monte's year end is the last Friday of the calendar year or the first Friday
subsequent to the end of the calendar year. As discussed in Note 1, IAT changed
its year end as of January 2, 1999 to conform to Fresh Del Monte's year end.
Prior to January 2, 1999, IAT's fiscal year end was September 30. As a result,
the accompanying consolidated financial statements include the financial
position of IAT as of December 31, 1999 and September 30, 1998, and the results
of operations of IAT for the years ended December 31, 1999, September 30, 1998,
and September 30, 1997. During the three month period ended January 1, 1999,
$77.2 million was advanced by Fresh Del Monte to IAT. Of this amount, $57.9
million was used for the repayment of existing IAT debt and such repayments have
been reflected as a reduction of debt in the accompanying consolidated balance
sheet as of January 1, 1999. The remaining $19.3 million was not eliminated in
the accompanying consolidated balance sheet as of January 1, 1999 due to the
different fiscal year-ends. As such, this amount has been included in "Prepaid
expenses and other current assets" in the accompanying consolidated balance
sheet as of January 1, 1999. All other significant intercompany accounts and
transactions have been eliminated in consolidation.
USE OF ESTIMATES
Preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from these estimates.
CASH AND CASH EQUIVALENTS
Fresh Del Monte classifies as cash equivalents all highly liquid investments
with a maturity of three months or less at the time of purchase.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is computed using
the weighted average cost method for fresh produce, principally in-transit, and
the first-in first-out, actual cost or average cost methods for raw materials
and packaging supplies. Raw materials inventory consists primarily of
agricultural supplies and spare parts.
GROWING CROPS
Expenditures on pineapple, deciduous fruit and melon growing crops are valued at
the lower of cost or market and are deferred and charged to income when the
related crop is harvested and sold. The deferred growing costs consist primarily
of land preparation, cultivation, irrigation and fertilization costs.
Expenditures related to banana crops are expensed as incurred.
F-11
<PAGE> 65
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS IN UNCONSOLIDATED COMPANIES
Investments in unconsolidated companies are accounted for under the equity
method of accounting for investments in 20% to 50% owned companies and for
investments in over 50% owned companies over which Fresh Del Monte does not have
control.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is recorded
following the straight-line method over the estimated useful lives of the
assets, which ranges from 10 to 30 years for buildings, 10 to 20 years for ships
and containers, 2 to 20 years for machinery and equipment, 3 to 20 years for
furniture, fixtures and office equipment and 2 to 10 years for automotive
equipment. Leasehold improvements are amortized over the life of the lease or
the related asset, whichever is shorter. When assets are retired or disposed of,
the costs and accumulated depreciation or amortization are removed from the
respective accounts and any related gain or loss is recognized. Maintenance and
repairs are charged to expense when incurred. Significant expenditures, which
extend useful lives of assets, are capitalized. Costs related to land
improvements for banana, pineapple, deciduous fruit and other agricultural
projects are deferred during the formative stage and are amortized over the
estimated life of the project.
GOODWILL
Goodwill is amortized on a straight-line basis over its estimated useful life
which ranges from 10 to 40 years. Fresh Del Monte continually assesses the
carrying value of its goodwill in order to determine whether an impairment has
occurred. This assessment takes into account both historical and forecasted
results of operations including consideration of a terminal value.
IMPAIRMENT OF LONG-LIVED ASSETS
Fresh Del Monte accounts for the impairment of long-lived assets under Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No. 121).
SFAS No. 121 requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. Based on current circumstances, Fresh Del Monte does not
believe that any impairment indicators are present.
REVENUE RECOGNITION
Revenue is recognized on sales of products when the customer receives title to
the goods, generally upon delivery.
F-12
<PAGE> 66
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
COST OF PRODUCTS SOLD
Cost of products sold includes the cost of produce, packaging materials, labor
and overhead, ocean and inland freight and other distribution costs.
INCOME TAXES
Deferred income taxes are recognized for the tax consequences in future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each year end, based on enacted tax laws and statutory tax
rates applicable to the year in which the differences are expected to effect
taxable income. Valuation allowances are established when deemed more likely
than not that future taxable income will not be sufficient to realize income tax
benefits. Generally, income tax expense is the tax payable for the year and the
net change during the year in deferred tax assets and liabilities.
ENVIRONMENTAL REMEDIATION LIABILITIES
Losses associated with environmental remediation obligations are accrued when
such losses are probable and can be reasonably estimated.
DEFERRED CREDIT VESSEL LEASES
Deferred credit vessel leases represents the excess of amounts due under
long-term operating leases of six vessels over the estimated fair value of such
leases. At the time of the FDP/GRC Acquisition on December 20, 1996, Fresh Del
Monte revalued the liability for deferred credit vessel leases to its fair value
of $14.5 million. At December 31, 1999 and January 1, 1999, $2.9 million and
$4.7 million, respectively, were included in accrued expenses. At January 1,
1999, $2.9 million was classified as deferred credit vessel leases. These
amounts are amortized over the remaining life of the leases, which expire during
the year 2000.
CURRENCY TRANSLATION
For Fresh Del Monte's operations in countries where the functional currency is
other than the U.S. dollar, balance sheet amounts are translated using the
exchange rate in effect at the balance sheet date. Income statement amounts are
translated at the average exchange rate for the year. The gains and losses
resulting from the changes in exchange rates from year to year are recorded as a
component of accumulated other comprehensive loss.
For Fresh Del Monte's other operations where the functional currency is the U.S.
dollar or where the operations are located in highly inflationary countries,
non-monetary assets are translated at historical exchange rates. Other balance
sheet amounts are translated at the exchange rates in effect at the balance
sheet date. Income statement accounts, excluding depreciation, are translated at
the average exchange rate for the year. These translation adjustments are
included in the determination of net income.
F-13
<PAGE> 67
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Other income, net in the accompanying consolidated statements of income includes
approximately $3.6 million, $1.5 million and $2.0 million in net losses on
foreign exchange for 1999, 1998 and 1997, respectively. These amounts include
the effect of foreign currency translation and realized foreign currency gains
and losses.
NET INCOME PER ORDINARY SHARE
Basic and diluted earnings per share is calculated in accordance with Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128). All earnings
per share amounts for all periods have been presented, and where appropriate,
restated to conform to the requirements of SFAS No. 128.
Net income per ordinary share represents the net income applicable to ordinary
shareholders after deducting the redemption premium, dividends and accretion on
the Convertible Preferred Shares. Net income per ordinary share is computed by
dividing the net income applicable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during such year.
STOCK BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123) encourages, but does not require, companies to
record stock-based compensation plans at fair value. Fresh Del Monte has chosen,
as allowed by the provisions of SFAS No. 123, to account for its Stock Plan
under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" (APB No. 25) and related interpretations. Under APB No. 25,
because the exercise price of Fresh Del Monte's employee stock options equals
the market price of the underlying stock on the date of grant, no compensation
expense is recorded. SFAS No. 123 requires disclosure of the estimated fair
value of employee stock options granted after 1994 and pro forma financial
information assuming compensation expense was recorded using these fair values.
OFF BALANCE SHEET RISK
Fresh Del Monte enters into currency forward contracts as a hedge against
certain currency exposures, principally relating to sales made in Europe and in
the Asia Pacific region. Gains and losses on these contracts are included in
income when the contracts are closed and are included in other income, net in
the accompanying consolidated statements of income.
RECLASSIFICATIONS
Certain amounts from 1998 and 1997 have been reclassified to conform to the 1999
presentation.
F-14
<PAGE> 68
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133). This statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. In June 1999, the FASB issued Statement of Financial Accounting
Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities
- - Deferral of the Effective Date of FASB Statement No. 133" (SFAS No. 137),
which delayed the effective date of SFAS No. 133 until the first fiscal quarter
of fiscal years beginning after June 15, 2000. Fresh Del Monte plans to adopt
SFAS No. 133 in the year 2001 and is currently assessing the impact this
statement will have on its consolidated financial statements.
3. ACQUISITIONS
BELGIAN ACQUISITION
On January 14, 1999, Fresh Del Monte acquired all of the outstanding shares of
Banana Marketing Belgium N.V. (BMB) and executed a long-term banana purchase
agreement with a subsidiary of C.I. Banacol S.A. (Banacol). Banacol is a
significant producer of bananas and BMB was Banacol's exclusive marketing
company in Europe. The total consideration paid in connection with the
acquisition of BMB was $58.7 million. The acquisition was accounted for using
the purchase method of accounting and, accordingly, the purchase price was
allocated to the assets acquired of $36.9 million, consisting primarily of
European banana import licenses, based on an appraisal. The value assigned to
the banana import licenses is included in other noncurrent assets and is being
amortized over their estimated life of five years. The excess of the purchase
price over the fair value of net assets acquired of $21.8 million was classified
as goodwill and is being amortized over 20 years.
NATIONAL POULTRY
On November 25, 1998, Fresh Del Monte acquired a 62% majority interest in
National Poultry Company PLC (National Poultry), a publicly traded company in
Jordan, engaged in the poultry business. The total consideration paid was $11.9
million, of which approximately $6.4 million was used to pay down existing debt.
During 1999, Fresh Del Monte acquired an additional 17% interest in National
Poultry. The acquisitions were accounted for using the purchase method of
accounting and, accordingly, the purchase prices were allocated to the assets
acquired and liabilities assumed based on estimates of their underlying fair
values. A portion of the acquired shares were purchased from members of the
Abu-Ghazaleh family for a total purchase price of $4.5 million in 1998, based on
a fairness opinion from an independent party.
F-15
<PAGE> 69
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. ACQUISITIONS (continued)
The following unaudited pro forma information presents a summary of 1998
consolidated results of operations of Fresh Del Monte as if the acquisition of
National Poultry had occurred on December 27, 1997 (U.S. dollars in millions,
except per share data):
1998
------------
Net sales $ 1,615.1
Income before extraordinary item 74.2
Net income $ 56.1
Net income per ordinary share $ 1.04
Number of ordinary shares used in computation 53,774,831
The unaudited pro forma results do not purport to be indicative of the results
of operations which actually would have resulted had the acquisition of National
Poultry occurred on December 27, 1997, or of future results of operations of the
consolidated entities.
HORN-LINIE
On December 23, 1997, Fresh Del Monte acquired the remaining 49% minority
interest in Horn-Linie. The total consideration paid in connection with the
acquisition was $14.7 million and the assumption of approximately $22.3 million
in liabilities (including $10.8 million in long-term debt). The acquisition was
accounted for using the purchase method of accounting and, accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed
based on appraisals and other estimates of their underlying fair values. The
excess purchase price over the fair value of the net assets acquired of $6.0
million has been classified as goodwill and is being amortized over 40 years.
The acquisition was financed through a loan secured by a mortgage on two of
Horn-Linie's multi-purpose refrigerated vessels (see Note 12). The loan amount
of $26.0 million includes the consideration paid in connection with the
acquisition as well as approximately $10.8 million in existing debt that was
refinanced. For the year ended December 26, 1997, Fresh Del Monte accounted for
the earnings from its investment in Horn-Linie using the equity method of
accounting (see Note 5).
The following unaudited pro forma information presents a summary of 1997
consolidated results of operations of Fresh Del Monte as if the acquisition of
the remaining 49% interest in Horn-Linie had occurred on December 28, 1996 (U.S
dollars in millions, except per share data):
1997
------------
Net sales $ 1,461.4
Income before extraordinary item 64.6
Net income 54.2
Net income applicable to ordinary shareholders $ 31.7
Net income per ordinary share $ 0.72
Number of ordinary shares used in computation 43,765,188
F-16
<PAGE> 70
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. ACQUISITIONS (continued)
The unaudited pro forma results do not purport to be indicative of the results
of operations which actually would have resulted had the acquisition of the
remaining 49% interest in Horn-Linie occurred on December 28, 1996, or of future
results of operations of the consolidated entities.
4. INVENTORIES
Inventories consisted of the following (U.S. dollars in millions):
December 31, January 1,
1999 1999
------------ ----------
Fresh produce, principally in-transit $ 57.9 $ 46.5
Raw materials and packaging supplies 89.0 62.0
Growing crops 52.0 51.3
------ ------
$198.9 $159.8
====== ======
5. INVESTMENTS IN UNCONSOLIDATED COMPANIES
Fresh Del Monte utilizes the equity method of accounting for investments in 20%
to 50% owned companies and for investments in over 50% owned companies over
which Fresh Del Monte does not have control. Investments in unconsolidated
companies accounted for under the equity method amounted to $51.9 million and
$55.7 million at December 31, 1999 and January 1, 1999, respectively. At
December 31, 1999 and January 1, 1999, net amounts receivable from
unconsolidated companies amounted to $9.6 million and $13.5 million,
respectively.
These unconsolidated companies are engaged in the manufacturing of corrugated
boxes (Compania Industrial Corrugadora Guatemala, S.A. - 50% owned); maritime
transportation (Horn-Linie - a non-controlling 51% interest through December 23,
1997 (see Note 3)); and the production and distribution of fresh fruit and other
produce (Davao Agricultural Ventures Corporation - 40% owned; Agricola Villa
Alegre, Ltda - 50% owned; various melon farms - 50% owned; Interfrucht - a
non-controlling 80% interest (see Note 1)).
Purchases from unconsolidated companies were $58.7 million, $55.5 million and
$50.5 million for 1999, 1998, and 1997, respectively.
Combined financial data of unconsolidated companies is summarized as follows
(U.S. dollars in millions):
December 31, January 1,
1999 1999
------------ ----------
Current assets $52.4 $55.7
Noncurrent assets 82.5 81.1
Current liabilities (36.5) (32.6)
Noncurrent liabilities (7.7) (9.6)
----- -----
Net worth $90.7 $94.6
===== =====
F-17
<PAGE> 71
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
5. INVESTMENTS IN UNCONSOLIDATED COMPANIES (continued)
Year Ended
----------------------------------------
December 31, January 1, December 26,
1999 1999 1997
------------ ---------- ------------
Net sales $228.4 $263.0 $285.8
Gross profit 14.0 23.6 23.5
Net income 6.3 12.4 16.4
Fresh Del Monte's portion of earnings in unconsolidated companies amounted to
$3.7 million in 1999, $8.9 million in 1998 and $9.0 million in 1997 and is
included in other income, net in the accompanying consolidated statements of
income.
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (U.S. dollars in
millions):
<TABLE>
<CAPTION>
December 31, January 1,
1999 1999
------------ ----------
<S> <C> <C>
Land and land improvements $209.0 $181.2
Buildings and leasehold improvements 141.3 114.6
Ships and containers 182.2 156.0
Machinery and equipment 106.4 91.3
Furniture, fixtures and office equipment 41.8 17.2
Automotive equipment 15.6 15.9
Construction-in-progress 26.8 23.4
------ ------
723.1 599.6
Less accumulated depreciation (132.5) (96.1)
------ ------
$590.6 $503.5
====== ======
</TABLE>
Depreciation and amortization expense amounted to $36.3 million, $33.1 million
and $26.7 million for 1999, 1998 and 1997, respectively.
Buildings, containers, machinery and equipment and automotive equipment under
capital leases totaled $17.2 million and $16.3 million at December 31, 1999 and
January 1, 1999, respectively. Accumulated amortization for assets under capital
leases was $2.7 million and $1.5 million at December 31, 1999 and January 1,
1999, respectively.
F-18
<PAGE> 72
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
7. HURRICANE MITCH
Fresh Del Monte recorded a charge in 1998 of $26.5 million in asset write-offs
and other costs, net of insurance proceeds received as of February 18, 1999 of
$3.0 million, due to damage incurred to its Guatemalan operations as a result of
excessive flooding caused by Hurricane Mitch. Additional insurance recoveries
related to Hurricane Mitch of $13.5 million during 1999 are included in other
income, net for the year ended December 31, 1999.
Fresh Del Monte maintains insurance for both property damage and business
interruption applicable to its production facilities, including its operations
in Guatemala. The policies providing the coverages for losses caused by
Hurricane Mitch were subject to deductibles of $0.1 million for property damage
and business interruption. Fresh Del Monte is pursuing additional recoveries
under its business interruption coverages related to the damage of its
operations in Guatemala caused by Hurricane Mitch. The amount of total
recoveries under business interruption coverages cannot be estimated at this
time.
8. ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss consists of the following (U.S. dollars in
millions):
<TABLE>
<CAPTION>
December 31, January 1,
1999 1999
------------ ----------
<S> <C> <C>
Currency translation adjustment $ (5.2) $ (2.9)
Unrealized loss on available-for-sale securities (3.7) --
-------- --------
$ (8.9) $ (2.9)
======== ========
</TABLE>
9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following (U.S. dollars
in millions):
<TABLE>
<CAPTION>
December 31, January 1,
1999 1999
------------ ----------
<S> <C> <C>
Trade payables $ 90.3 $ 97.1
Payroll and employee benefits 10.2 11.4
Vessel and port operating expenses 19.6 12.4
Accrued interest payable 3.1 2.8
Current portion of deferred
credit vessel leases 2.9 4.7
Other payables and accrued expenses 69.1 66.4
------ ------
$195.2 $194.8
====== ======
</TABLE>
F-19
<PAGE> 73
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
10. PROVISION FOR INCOME TAXES
The provision for income taxes consisted of the following (U.S. dollars in
millions):
<TABLE>
<CAPTION>
Year ended
-------------------------------------------
December 31, January 1, December 26,
1999 1999 1997
------------ ---------- -----------
<S> <C> <C> <C>
Current:
U.S. federal income tax $ 2.5 $ 4.5 $ 4.7
State 0.3 0.5 0.4
Non-U.S 5.8 4.9 8.8
-------- -------- --------
8.6 9.9 13.9
Deferred:
U.S 1.7 1.5 (0.1)
Non-U.S 4.4 0.8 (0.7)
-------- -------- --------
Provision for income taxes $ 14.7 $ 12.2 $ 13.1
======== ======== ========
</TABLE>
Total income tax payments during 1999, 1998 and 1997 were $5.9 million, $7.4
million and $6.9 million, respectively.
Income before provision for income taxes and extraordinary item consisted of the
following (U.S. dollars in millions):
Year ended
------------------------------------------
December 31, January 1, December 26,
1999 1999 1997
------------ ---------- ------------
United States $ 3.3 $ 13.8 $ 9.1
Non-U.S 68.3 75.8 67.6
------- ------- -------
$ 71.6 $ 89.6 $ 76.7
======= ======= =======
F-20
<PAGE> 74
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
10. PROVISION FOR INCOME TAXES (continued)
The differences between the reported provision for income taxes and income taxes
computed at the U.S. statutory federal income tax rate are explained in the
following reconciliation (U.S. dollars in millions):
<TABLE>
<CAPTION>
Year Ended
-----------------------------------------------
December 31, January 1, December 26,
1999 1999 1997
------------ ---------- ------------
<S> <C> <C> <C>
Income tax provision computed at the U.S.
statutory federal income tax rate $ 25.1 $ 31.4 $ 26.1
Effect of non-U.S. operations and tax rates (10.5) (19.1) (12.1)
Other 0.1 (0.1) (0.9)
-------- -------- --------
$ 14.7 $ 12.2 $ 13.1
======== ======== ========
</TABLE>
Deferred income tax assets and liabilities consisted of the following (U.S.
dollars in millions):
<TABLE>
<CAPTION>
December 31, January 1,
1999 1999
------------ ----------
<S> <C> <C>
DEFERRED TAX LIABILITIES:
Inventories $ (8.5) $ (7.7)
Investments (1.8) (1.8)
Depreciation (12.7) (13.2)
Equity in earnings of unconsolidated companies (4.0) (3.5)
-------- --------
Total deferred tax liabilities (27.0) (26.2)
DEFERRED TAX ASSETS:
Pension liability 1.4 2.9
Post-retirement benefits other than pension 6.7 6.4
Net operating loss carryforwards (non U.S.) 23.6 20.6
Other, net 5.2 5.2
-------- --------
Total deferred tax assets 36.9 35.1
Valuation allowance (21.2) (14.2)
-------- --------
Net deferred tax liabilities $ (11.3) $ (5.3)
======== ========
</TABLE>
F-21
<PAGE> 75
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
10. PROVISION FOR INCOME TAXES (continued)
The valuation allowance established with respect to the deferred tax assets
relates primarily to net operating losses and employee benefit accruals in
taxing jurisdictions where, due to Fresh Del Monte's current and foreseeable
operations within the various jurisdictions, it is deemed more likely than not
that future taxable income will not be sufficient within such jurisdictions to
realize the related income tax benefits. During 1999, the valuation allowance
increased by $7.0 million. At December 31, 1999, Fresh Del Monte had
approximately $105.4 million of tax operating loss carry forwards in certain
Non-U.S. jurisdictions as follows (U.S. dollars in millions):
Expiration Amount
---------- ------
2000 $ 23.4
2001 36.3
2003 0.4
2004 1.5
No Expiration 43.8
------
$105.4
======
11. NOTES PAYABLE TO BANKS
Fresh Del Monte has $14.6 million of working capital revolving credit facilities
with various banks in Japan, Latin America and Europe. These facilities expire
at various dates starting on January 2000 and bear interest, as of December 31,
1999, at rates ranging from 2.38% to 10%. At December 31, 1999, there was $3.2
million of borrowings outstanding under these credit facilities. There were no
borrowings outstanding under these credit facilities at January 1, 1999.
The weighted average interest rate on borrowings under these short-term credit
facilities for 1999 and 1998 was 9.74% and 10.31%, respectively. The cash
payments for interest on notes payable to banks and other financial institutions
was $0.2 million, $6.1 million and $7.0 million for 1999, 1998 and 1997,
respectively.
F-22
<PAGE> 76
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
12. LONG-TERM DEBT
The following is a summary of long term-debt (U.S. dollars in millions):
<TABLE>
<CAPTION>
December 31, January 1,
1999 1999
------------ ----------
<S> <C> <C>
$450.0 million five-year syndicated credit facility (see below) $397.8 $264.0
Term notes bearing interest at 7.365%, payable in quarterly
installments of principal and interest maturing in January
2003, secured by mortgages on five of Fresh Del Monte's
vessels 22.3 --
Term notes, including GRC term note, bearing interest at various
rates ranging from LIBOR plus 1.25% (7.75% at December 31, 1999) to
7.14%, payable in quarterly installments of principal and interest
maturing from August 2001 to January 2005, with a balloon payment of
$6.9 million due in January 2005, secured by mortgages on five of
Fresh Del Monte's vessels 28.2 33.4
Mortgage notes payable to financial institutions, various rates ranging
from LIBOR plus 1.6% to LIBOR plus 1.8% (8.1% to 8.3% at December 31,
1999), due 1999 to 2002, secured by five vessels and
refrigerated containers 29.2 35.0
Various other notes payable 11.8 9.2
------ ------
Total 489.3 341.6
Less current portion (21.6) (14.3)
------ ------
$467.7 $327.3
====== ======
</TABLE>
At the date of the FDP/GRC Acquisition, FDP N.V. had $300 million in N.V. Notes
outstanding (see Note 1). At that date, the N.V. Notes were recorded at their
fair market value of $288.0 million. The difference between the face value of
the N.V. Notes and their fair value was being accreted by periodic charges to
interest expense over the remaining life of the debt. Fresh Del Monte used
approximately $106.5 million of the net proceeds from the Initial Public
Offering (see Note 1) to purchase and retire $100.0 million in aggregate
principal amount of the then outstanding N.V. Notes, which resulted in an
extraordinary loss of $10.4 million.
On May 19, 1998, FDP N.V. completed its tender offer to purchase the remaining
$200.0 million of outstanding N.V. Notes and solicitation of consents to certain
proposed amendments to the indenture under which the N.V. Notes were issued.
Approximately 98.4%, or $196.8 million, of the N.V. Notes were purchased in the
tender offer. The purchase was funded by a drawdown of $207.9 million from a
$350.0 million, five-year syndicated credit facility (the Revolving Credit
Facility) entered into by Fresh Del Monte, and certain wholly-owned subsidiaries
of Fresh Del Monte, with Rabobank International, New York Branch, as agent. The
remaining N.V. Notes were redeemed in June 1998 at a redemption price of $1,050
for each $1,000 principal amount of N.V. Notes being redeemed, plus accrued
interest to the date of redemption. Completion of the tender offer and the
redemption resulted in an extraordinary charge of $18.1 million.
F-23
<PAGE> 77
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
12. LONG-TERM DEBT (continued)
On December 15, 1998, the Revolving Credit Facility was amended to increase the
borrowing level to $389.0 million and on May 20, 1999, the Revolving Credit
Facility was amended to increase the borrowing level to $450.0 million. By its
terms, the amount of the revolving credit facility will be reduced by $10.8
million on each November 1 and May 1, commencing on November 1, 1999. The
Revolving Credit Facility includes a swing line facility, a letter of credit
facility and an exchange contract facility. The Revolving Credit Facility is
collateralized directly or indirectly by substantially all of theassets of Fresh
Del Monte and its subsidiaries. The facility expires on May 19, 2003, and
permits borrowings with an interest rate based on a spread over the London
Interbank offered rate (LIBOR). Outstanding borrowings at December 31, 1999 were
$397.8 million, bearing interest at an average interest rate of 8.41%. At
December 31, 1999, Fresh Del Monte applied $6.0 million of available credit
under this facility towards the issuance of letters of credit, of which $2.9
million was required pursuant to agreements with the owners of certain vessels
on long-term charter which expire during the year 2000.
The Revolving Credit Facility contains covenants which require Fresh Del Monte
to maintain certain minimum financial ratios and limits the payment of future
dividends. In connection with the Revolving Credit Facility, Fresh Del Monte
entered into an interest rate swap agreement expiring in 2003 with the same bank
to limit the effect of increases in interest rates on a portion of the Revolving
Credit Facility. The nominal amount of the swap decreases over its life from
$150.0 million in the first three months, to $53.6 million in the last three
months. The cash differentials paid or received on the swap agreement are
accrued and recognized as adjustments to interest expense. Interest expense
related to the swap agreement for 1999 and 1998 amounted to $0.9 million and
$0.7 million, respectively.
In connection with the acquisition of Horn-Linie (see Note 3), GRC, one of Fresh
Del Monte's subsidiaries, entered into a note payable with a bank in the amount
of $26.0 million (the GRC Term Note). The proceeds from the GRC Term Note were
used to fund the acquisition price of $14.7 million, to repay $10.8 million of
assumed debt, and to fund working capital. The GRC Term Note is secured by a
mortgage on two of Fresh Del Monte's multi-purpose refrigerated vessels.
Cash payments of interest on long-term debt were $29.4 million, $22.3 million
and $34.6 million for 1999, 1998 and 1997, respectively.
Maturities on long-term debt during the next five years are (U.S. dollars in
millions):
2000 $21.6
2001 22.7
2002 20.9
2003 411.9
2004 3.6
Thereafter 8.6
------
$489.3
======
F-24
<PAGE> 78
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
13. CAPITAL LEASE OBLIGATIONS
Fresh Del Monte leases certain buildings, machinery and equipment under capital
leases. These lease obligations are payable in monthly installments. The future
minimum lease payments at December 31, 1999 are as follows (U.S.
dollars in millions):
2000 $ 4.3
2001 4.0
2002 3.2
2003 2.1
-----
Total payments remaining under capital leases 13.6
Less amount representing interest (2.0)
-----
Present value of capital leases 11.6
Less current portion (3.3)
-----
Capital lease obligations, net of current portion $ 8.3
=====
14. CONVERTIBLE PREFERRED SHARES
In connection with the FDP/GRC Acquisition, Fresh Del Monte issued 55,000 Series
1 Convertible Preferred Shares with a face amount of $55.0 million (see Note 1).
Cumulative dividends were payable in kind at a fixed annual rate of 6% beginning
June 30, 1997, and commencing in January 2002, dividends were payable in cash at
a rate of 8% per year. Each Convertible Preferred Share had an initial
liquidation preference of $1,000 and was convertible into shares of Fresh Del
Monte's Class B ordinary shares initially representing 20% of Fresh Del Monte's
ordinary shares. In connection with the acquisition, the Convertible Preferred
Shares were recorded at fair value at the date of issuance less issue costs. The
excess of the preference over the fair value was being accreted by periodic
charges to retained earnings over the original life of the issue resulting in an
effective interest rate of 9%. The terms of the Convertible Preferred Shares
restricted, among other things, the sale of Fresh Del Monte and certain other
significant transactions by Fresh Del Monte.
On October 29, 1997, Fresh Del Monte completed its Initial Public Offering (see
Note 1). Fresh Del Monte used $68.5 million of the net proceeds from the Initial
Public Offering to redeem all of its issued and outstanding Convertible
Preferred Shares with a book value of $48.9 million. As a result of the
redemption, Fresh Del Monte recorded a $19.6 million charge to retained
earnings, representing the difference between the redemption price and the book
value of the Convertible Preferred Shares.
F-25
<PAGE> 79
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
15. EARNINGS PER SHARE
Basic and diluted per share income applicable to ordinary shareholders is
calculated as follows (U.S. dollars in millions, except per share data):
<TABLE>
<CAPTION>
Year Ended
-----------------------------------------------------------
December 31, January 1, December 26,
1999 1999 1997
-------------- -------------- --------------
<S> <C> <C> <C>
NUMERATOR:
Income before extraordinary item $ 56.9 $ 77.4 $ 63.6
Extraordinary charge on early extinguishment of debt -- 18.1 10.4
-------------- -------------- --------------
Net income 56.9 59.3 53.2
Redemption premium, dividends and accretion on
Convertible Preferred Shares -- -- (22.5)
-------------- -------------- --------------
Net income applicable to ordinary shareholders $ 56.9 $ 59.3 $ 30.7
============== ============== ==============
DENOMINATOR:
Denominator for basic earnings per share - weighted average
number of ordinary shares outstanding 53,763,600 53,632,656 43,765,188
Effect of dilutive securities:
Employee stock options 41,637 119,152 --
Shares issuable in connection with an acquisition -- 23,023 --
-------------- -------------- --------------
Denominator for diluted earnings per share 53,805,237 53,774,831 43,765,188
============== ============== ==============
Basic and diluted per share income applicable to ordinary
shareholders:
Before extraordinary item $ 1.06 $ 1.44 $ 0.94
Extraordinary charge $ -- $ (0.34) $ (0.24)
Net income $ 1.06 $ 1.10 $ 0.70
</TABLE>
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AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
16. RETIREMENT AND OTHER EMPLOYEE BENEFITS
U.S. PLANS
Fresh Del Monte sponsors three non-contributory defined benefit pension plans
which cover substantially all of its U.S. based employees. These plans provide
benefits based on the employees' years of service and qualifying compensation.
Fresh Del Monte's funding policy for these plans is to contribute amounts
sufficient to meet the minimum funding requirements of the Employee Retirement
Income Security Act of 1974, as amended, or such additional amounts as
determined appropriate to assure that assets of the plans would be adequate to
provide benefits. Substantially all of the plans' assets are invested in fixed
income and equity funds.
As of July 31, 1997, a subsidiary of Fresh Del Monte "froze" (i.e., ceased
accruing benefits under) its cash balance pension plan covering all salaried
employees who are U.S. based and work a specified minimum number of hours. The
hypothetical account balances under such plan will continue to be credited with
monthly interest and participants who are not fully vested in such plan will
continue to earn vesting services after July 31, 1997. Fresh Del Monte has
adopted an amendment to terminate the cash balance plan effective as of December
31, 1999. As of October 18, 1999, Fresh Del Monte settled all retiree
liabilities and assets under the cash balance The gain recognized due to
settlement amounted to $0.2 million for 1999.
Fresh Del Monte provides contributory health care benefits to its U.S. retirees
and their dependents. Fresh Del Monte has recorded a liability equal to the
unfunded accumulated benefit obligation as required by the provisions of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" (SFAS No. 106). SFAS No. 106
requires that the cost of these benefits, which are primarily for health care
and life insurance, be recognized in the financial statements throughout the
employees' active working careers. Claims under the plan are funded by Fresh Del
Monte as they are incurred and, accordingly, the plan has no assets.
The weighted average discount rate used in determining the accumulated benefit
obligation for postretirement pension benefit obligation was 7.5% and 6.75% at
December 31, 1999 and January 1, 1999, respectively. For measuring the liability
as of December 31, 1999, a 6.25% annual rate of increase in real medical
inflation, declining gradually to 4.75% by the year 2003 and thereafter, were
assumed.
The assumptions used in the calculation of the actuarial present value of the
projected benefit obligation and expected long-term return on plan assets for
Fresh Del Monte's defined benefit pension plans consisted of the following:
<TABLE>
<CAPTION>
December 31, January 1,
1999 1999
------------ ----------
<S> <C> <C>
Weighted average discount rate 6.00% - 6.75% 6.00% - 7.25%
Rate of increase in compensation levels 4.50% 4.50%
Expected long-term return on assets 7.75% - 8.75% 7.75% - 8.75%
</TABLE>
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
16. RETIREMENT AND OTHER EMPLOYEE BENEFITS (continued)
The following table sets forth a reconciliation of benefit obligations, plan
assets and funded status for Fresh Del Monte's defined benefit pension plans and
post retirement pension plan as of December 31, 1999 and January 1, 1999 (U.S.
dollars in millions):
<TABLE>
<CAPTION>
Postretirement Plan Defined Benefit Plans
------------------------ -------------------------
December 31, January 1, December 31, January 1,
1999 1999 1999 1999
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
CHANGES IN BENEFIT OBLIGATION:
Benefit obligation at beginning of period $ 11.2 $ 19.6 $ 33.7 $ 32.1
Service cost 0.4 0.3 0.4 0.3
Interest cost 0.9 0.7 2.1 2.2
Actuarial (gain)/loss 0.5 (8.9) (1.0) 2.2
Benefits paid (0.5) (0.5) (2.6) (3.3)
Settlements -- -- (11.0) --
Foreign exchange translation -- -- (0.4) 0.2
-------- -------- -------- --------
Benefit obligation at end of period $ 12.5 $ 11.2 $ 21.2 $ 33.7
======== ======== ======== ========
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of
period $ -- $ -- $ 29.6 $ 29.2
Actual return on plan assets -- -- 1.5 3.1
Employer contribution 0.5 0.5 1.0 0.6
Benefits paid (0.5) (0.5) (2.6) (3.3)
Settlements -- -- (11.0) --
-------- -------- -------- --------
Fair value of plan assets at end of period $ -- $ -- $ 18.5 $ 29.6
======== ======== ======== ========
RECONCILIATION:
Funded status $ (12.5) $ (11.2) $ (2.7) $ (4.1)
Unrecognized net (gain)/loss (6.3) (7.0) (0.1) 0.3
-------- -------- -------- --------
Accrued benefit cost $ (18.8) $ (18.2) $ (2.8) $ (3.8)
======== ======== ======== ========
</TABLE>
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
16. RETIREMENT AND OTHER EMPLOYEE BENEFITS (CONTINUED)
The following table sets forth the net periodic pension cost of Fresh Del
Monte's defined benefit pension plans for 1999, 1998 and 1997 (U.S. dollars in
millions):
<TABLE>
<CAPTION>
Year Ended
----------------------------------------------------
December 31, January 1, December 26,
1999 1999 1997
------------ ---------- ------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 0.4 $ 0.3 $ 0.8
Interest cost on projected benefit obligation 2.1 2.2 2.2
Return on assets (2.1) (2.1) (3.8)
Net amortization and deferral -- -- 1.6
-------- -------- --------
Net periodic pension expense for defined benefit
plans $ 0.4 $ 0.4 $ 0.8
======== ======== ========
</TABLE>
The following table sets forth the net periodic pension cost of Fresh Del
Monte's postretirement pension plan for 1999, 1998 and 1997 (U.S. dollars in
millions):
<TABLE>
<CAPTION>
Year Ended
----------------------------------------------
December 31, January 1, December 26,
1999 1999 1997
------------ ---------- ------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 0.4 $ 0.3 $ 0.6
Interest cost on accumulated postretirement benefit
obligation 0.9 0.7 1.3
Net amortization of deferred gain (0.3) (0.6) --
-------- -------- --------
Net periodic postretirement benefit cost $ 1.0 $ 0.4 $ 1.9
======== ======== ========
</TABLE>
The cost trend rate assumption has a significant impact on the amounts reported.
For example, increasing the cost trend rate 1% each year would increase the
accumulated postretirement benefit obligation by $1.6 million as of December 31,
1999 and the total of service cost plus interest cost by $0.2 million for 1999.
In addition, decreasing the trend rate by 1% would decrease the accumulated
postretirement benefit obligation by $1.4 million as of December 31, 1999 and
the total of the service cost plus interest cost by $0.2 million for 1999.
Fresh Del Monte also participates in several multi-employer pension plans for
the benefit of its U.S. employees who are union members. In 1997, Fresh Del
Monte ceased certain of its stevedoring operations performed by one of its
subsidiaries, reducing its participation in these plans. The data available from
administrators of the multi-employer pension plans is not sufficient to
determine the accumulated benefit obligations, or the net assets attributable to
the multi-employer plans in which Fresh Del Monte employees participate.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
16. RETIREMENT AND OTHER EMPLOYEE BENEFITS (CONTINUED)
Fresh Del Monte also sponsors a defined contribution plan established pursuant
to Section 401(k) of the Internal Revenue Code. Subject to certain dollar
limits, employees may contribute a percentage of their salaries to the plan, and
Fresh Del Monte will match a portion of each employee's contribution. This plan
is in effect for U.S. based employees only. The expense pertaining to this plan
was $0.4 million, $0.3 million and $0.3 million for 1999, 1998 and 1997,
respectively.
NON U.S. PLANS
Fresh Del Monte provides retirement benefits to substantially all employees who
are not U.S. based. Generally, benefits under these programs are based on an
employee's length of service and level of compensation. The majority of these
programs are commonly referred to as termination indemnities which provide
retirement benefits in accordance with programs mandated by the governments of
the countries in which such employees work. The expense pertaining to these
programs was $7.5 million, $6.4 million and $8.8 million for 1999, 1998 and
1997, respectively.
Funding generally occurs when employees cease active service. The most
significant of these programs pertains to one of Fresh Del Monte's subsidiaries
in Central America for which a liability of $15.8 million and $24.9 million was
recorded at December 31, 1999 and January 1, 1999, respectively. Expenses for
this program for 1999, 1998 and 1997 amounted to $3.3 million, $3.4 million and
$4.8 million, respectively, including service cost earned of $1.6 million, $1.7
million and $3.2 million, and interest cost of $1.7 million, $1.7 million and
$0.9 million, respectively. The decrease in the liability in 1999 was caused
primarily by payments made under the program to employees covered by the program
who were terminated during 1999.
As of August 31, 1997, a subsidiary of the Fresh Del Monte "froze" (i.e., ceased
accruing benefits under) its salary continuation plan covering all Latin
American management personnel. At December 31, 1999 and January 1, 1999, Fresh
Del Monte had $8.2 million accrued for this plan.
17. STOCK OPTIONS
Effective upon the completion of the Initial Public Offering, Fresh Del Monte
established a share option plan pursuant to which options to purchase ordinary
shares may be granted to certain directors, officers and key employees of Fresh
Del Monte chosen by the Board of Directors (the Option Plan). Under the Option
Plan, the Board of Directors is authorized to grant options to purchase an
aggregate of 2,380,030 ordinary shares. Under this plan, options have been
granted to directors, officers and other key employees to purchase ordinary
shares of Fresh Del Monte at the fair market value of the ordinary shares at the
date of grant.
On May 11, 1999, Fresh Del Monte's shareholders approved and ratified the 1999
Share Incentive Plan (the 1999 Plan). Under the 1999 Plan, the Board of
Directors is authorized to grant options to purchase an aggregate of 2,000,000
ordinary shares. Under this plan, options have been granted to directors,
officers and other key employees to purchase ordinary shares of Fresh Del Monte
at the fair market value of the ordinary shares at the date of grant.
F-30
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AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
17. STOCK OPTIONS (CONTINUED)
Under the plans, twenty percent of the options vest immediately and the
remaining options vest in equal installments over the next four years and may be
exercised over a period not in excess of ten years.
A summary of Fresh Del Monte's stock option activity and related information is
as follows:
<TABLE>
<CAPTION>
Number of Option Weighted Average
Shares Price Exercise Price
------ ----- --------------
<S> <C> <C> <C>
Options outstanding at December 28, 1996 -- -- --
Granted 1,355,000 $16.00 $16.00
Exercised -- -- --
Canceled -- -- --
---------
Options outstanding at December 26, 1997 1,355,000 $16.00 $16.00
Granted 60,000 $14.22 $14.22
Exercised (163,000) $16.00 --
Canceled (25,000) $16.00 --
---------
Options outstanding at January 1, 1999 1,227,000 $14.22 - $16.00 $15.91
Granted 1,960,000 $8.375 - $15.688 $10.885
Exercised -- -- --
Canceled (79,000) $9.281 - $16.00 --
---------
Options outstanding at December 31, 1999 3,108,000 $8.375 - $16.00 $12.757
=========
Exercisable at December 26, 1997 271,000 $16.00
========= ======
Exercisable at January 1, 1999 390,000 $15.95
========= ======
Exercisable at December 31, 1999 1,155,000 $14.10
========= ======
</TABLE>
The weighted average remaining contractual life of options outstanding at
December 31, 1999 is approximately nine years.
SFAS No. 123 requires pro forma information regarding net income and earnings
per share determined as if Fresh Del Monte had accounted for its employee stock
options under the fair value method of SFAS No. 123. The fair value for the
outstanding options was estimated at the date of grant using a Black-Scholes
option pricing model. The Black-Scholes option valuation model was developed for
use in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. In addition, option valuation models
require the input of highly subjective assumptions, including the expected stock
price volatility.
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AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
17. STOCK OPTIONS (CONTINUED)
For purposes of pro forma disclosures required by SFAS No. 123, the estimated
fair value of the options is amortized to expense over the options' vesting
period. Fresh Del Monte's 1999, 1998 and 1997 pro forma information follows
(U.S. dollars in millions, except per share data):
<TABLE>
<CAPTION>
Year Ended
-----------------------------------------
December 31, January 1, December 26,
1999 1999 1997
------------ ---------- ------------
<S> <C> <C> <C>
Net income $ 52.4 $ 56.9 $ 52.8
Net income applicable to ordinary shares 52.4 56.9 30.3
Net income per ordinary share $ 0.97 $ 1.06 $ 0.69
</TABLE>
The weighted-average fair value of each option granted during 1999, 1998 and
1997 is estimated at $5.18, $9.25 and $8.76, respectively, on the date of grant
using the Black-Scholes option-pricing model using the following assumptions:
dividend yield of 0%, expected volatility of 0.45, 0.766 and 0.568 in 1999, 1998
and 1997, respectively, risk free interest rate of 6.13%, 4.53% and 5.75% in
1999, 1998 and 1997, respectively and expected lives of five years.
In accordance with APB No. 25, because the exercise price of Fresh Del Monte's
employee stock options equaled the market price of the underlying stock on the
date of grant, no compensation expense was recorded for 1999, 1998 or 1997 in
connection with the Option Plan and the 1999 Plan.
18. COMMITMENTS AND CONTINGENCIES
Fresh Del Monte leases agricultural land and certain property, plant and
equipment, including office facilities and vessels, under operating leases. The
aggregate minimum rental payments under all operating leases with initial terms
of one year or more at December 31, 1999 are as follows (U.S. dollars in
millions):
2000 $16.7
2001 5.3
2002 5.0
2003 4.2
2004 4.0
Thereafter 6.7
-------
$41.9
=======
Total rent expense for all operating leases amounted to $55.2 million, $59.7
million and $51.5 million for 1999, 1998 and 1997, respectively, of which $40.9
million, $43.4 million and $39.9 million in 1999, 1998 and 1997, respectively,
pertained to vessel charter lease commitments.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
18. COMMITMENTS AND CONTINGENCIES (continued)
Fresh Del Monte also has agreements to purchase substantially all of the
production of certain independent growers in Costa Rica, Guatemala, Ecuador,
Cameroon, Colombia, Chile and the Philippines. Total purchases under these
agreements amounted to $560.9 million, $481.2 million and $327.9 million for
1999, 1998 and 1997, respectively.
Two of Fresh Del Monte's subsidiaries guarantee the debt on a vessel owned by
Interfrucht, an unconsolidated subsidiary of Fresh Del Monte. The debt totaled
$1.9 million and $3.8 million at December 31, 1999 and January 1, 1999,
respectively.
19. LITIGATION
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.
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FRESH DEL MONTE PRODUCE INC.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
19. LITIGATION (continued)
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 subsidiaries. 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.
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. has 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.
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 ofthe 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
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AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
19. LITIGATION (continued)
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.
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 dispure, 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 December 31, 1999, 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 December
31, 1999.
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
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AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
19. LITIGATION (continued)
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.
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). As of December 31, 1999, Fresh
Del Monte recorded a liability of approximately $4.2 million, which is included
in other noncurrent liabilities in the accompanying balance sheet.
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.
20. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject Fresh Del Monte to concentrations
of credit risk consist principally of temporary cash investments and trade
receivables. Fresh Del Monte places its temporary cash investments with
highly-rated financial institutions. Concentrations of credit risk with respect
to trade receivables are limited due to the large number of customers comprising
Fresh Del Monte's customer base, and their dispersion across many different
geographical regions. Generally, Fresh Del Monte does not require collateral or
other security to support customer receivables.
OFF BALANCE SHEET RISK
Fresh Del Monte enters into currency forward contracts as a hedge against
certain currency exposures, principally relating to sales made in Europe and the
Asia Pacific region. Gains and losses on these contracts are included in other
income, net when the contracts are closed. At December 31, 1999, there was $10.8
million (notional amount) of currency forward contracts outstanding for Japanese
Yen with an unrealized gain of $0.2 million at December 31, 1999. There were no
currency forward contracts outstanding at January 1, 1999.
Counterparties expose Fresh Del Monte to credit loss in the event of
non-performance on currency forward contracts. However, because the contracts
are entered into with highly-rated financial institutions, Fresh Del Monte does
not anticipate non-performance by any of these counterparties. The exposure is
usually the amount of the unrealized gains, if any, in such contracts.
F-36
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AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
20. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK (continued)
Fresh Del Monte, in estimating its fair value disclosures for financial
instruments, used the following methods and assumptions:
CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE: The
carrying value reported in the balance sheet for these items approximates their
fair value.
CAPITAL LEASE OBLIGATIONS. The carrying value of Fresh Del Monte's capital lease
obligations approximate their fair value based on current interest rates for
similar instruments.
NOTES PAYABLE AND LONG-TERM DEBT: The carrying value of Fresh Del Monte's notes
payable and long-term debt approximate their fair value since they bear interest
at variable rates or fixed rates which approximate market.
The carrying amounts and fair values of Fresh Del Monte's financial instruments
are as follows (U.S. dollars in millions):
<TABLE>
<CAPTION>
December 31, 1999 January 1, 1999
---------------------- ----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------ -------- ------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 31.2 $ 31.2 $ 32.8 $ 32.8
Accounts receivables 136.4 136.4 112.7 112.7
Accounts payable (90.3) (90.3) (97.1) (97.1)
Long-term debt (489.3) (489.3) (341.6) (341.6)
Capital lease obligations (11.6) (11.6) (12.6) (12.6)
Forward contracts -- (0.2) -- --
Swap agreement -- 1.5 (0.2) (3.6)
</TABLE>
21. RELATED PARTY TRANSACTIONS
Fresh Del Monte's products are distributed in Northern Europe by Interfrucht, an
unconsolidated subsidiary of GRC. Receivables from Interfrucht, included in
accounts receivable in the accompanying consolidated balance sheets, were $4.5
million and $2.8 million at December 31, 1999 and January 1, 1999, respectively.
Sales to this distributor amounted to $112.5 million, $131.2 million and $109.7
million for 1999, 1998 and 1997.
Sales to Ahmed Abu-Ghazaleh & Sons Company, a related party through common
ownership, were $8.7 million, $1.9 million and $4.9 million in 1999, 1998 and
1997, respectively. At December 31, 1999 and January 1, 1999, there were $0.7
million and $0.1 million of receivables from this related party which are
included in trade accounts receivable in the accompanying consolidated balance
sheets.
Management fees paid to IAT Group Inc. from the IAT companies were $1.4 million
in 1997 and are included in selling, general and administrative expenses in the
accompanying statements of income. During 1998, Fresh Del Monte discontinued the
policy of paying management fees of any kind to IAT Group Inc.
F-37
<PAGE> 91
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
21. RELATED PARTY TRANSACTIONS (continued)
Fresh Del Monte does not receive any administrative or other services from
affiliated companies outside the consolidated group, other than those described
above.
22. UNAUDITED QUARTERLY FINANCIAL INFORMATION
The following summarizes certain quarterly operating data (U.S. dollars in
millions, except per share data):
<TABLE>
<CAPTION>
Quarter Ended
--------------------------------------------------------
April 2, July 2, October 1, December 31,
1999 1999 1999 1999
-------- ------- ---------- ------------
<S> <C> <C> <C> <C>
Net sales $ 493.4 $ 476.2 $ 369.1 $ 404.5
Gross profit 64.9 54.2 26.2 5.3
Net income (loss) $ 35.4 $ 33.5 $ 6.6 $ (18.6)
Net income (loss) per share $ 0.66 $ 0.62 $ 0.12 $ (0.34)
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
--------------------------------------------------------
March 27, June 26, Sept. 25, Jan. 1,
1998 1998 1998 1999
-------- ------- ---------- ------------
<S> <C> <C> <C> <C>
Net sales $ 369.2 $ 473.9 $ 382.5 $ 374.5
Gross profit 35.4 99.0 44.5 15.8
Net income (loss) before
extraordinary item 13.1 75.6 19.8 (31.1)
Net income (loss) $ 13.1 $ 57.5 $ 19.8 $ (31.1)
Net income (loss) per share $ 0.24 $ 1.07 $ 0.37 $ (0.58)
</TABLE>
23. BUSINESS SEGMENT DATA
Fresh Del Monte is principally engaged in one major line of business, the
production, distribution and marketing of bananas, other fresh fruit and
vegetables and non-produce. Fresh Del Monte's products are sold in markets
throughout the world, with its major producing operations located in North and
South America, the Asia Pacific region, and Africa.
Fresh Del Monte's operations have been aggregated on the basis of products;
bananas, other fresh fruit and vegetables and non-produce. The non-product
category primarily represents shipping for third parties and packaging products.
F-38
<PAGE> 92
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
23. BUSINESS SEGMENT DATA (CONTINUED)
Fresh Del Monte evaluates performance based on several factors, of which gross
profit by product and total assets by geographic region are the primary
financial measures (U.S. dollars in millions):
<TABLE>
<CAPTION>
Year Ended
-------------------------------------------------------------------------------------
December 31, 1999 January 1, 1999 December 26, 1997
------------------------ ------------------------- -------------------------
Gross Gross Gross
Net Sales Profit Net Sales Profit Net Sales Profit
-------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bananas $ 951.3 $ (4.0) $ 897.5 $ 32.7 $ 822.3 $ 40.6
Other fresh fruit and
vegetables 701.3 155.5 638.2 160.6 544.3 109.9
Non-produce 90.6 (0.9) 64.4 1.4 85.8 13.2
-------- -------- -------- -------- -------- --------
TOTAL $1,743.2 $ 150.6 $1,600.1 $ 194.7 $1,452.4 $ 163.7
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Year Ended
-----------------------------------------------------------
December 31, 1999 January 1, 1999 December 26, 1997
------------------ --------------- -----------------
<S> <C> <C> <C>
NET SALES BY GEOGRAPHIC REGION:
North America $ 830.4 $ 781.0 $ 710.7
Europe 601.5 522.8 425.8
Asia Pacific 280.7 237.7 233.9
Other 30.6 58.6 82.0
-------- -------- --------
TOTAL NET SALES $1,743.2 $1,600.1 $1,452.4
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
PROPERTY PLANT AND EQUIPMENT: DECEMBER 31, 1999 JANUARY 1, 1999
----------------- ---------------
<S> <C> <C>
North America $ 75.9 $ 59.4
Europe 122.8 112.9
Asia Pacific 30.4 20.5
Central and South America 340.9 306.6
Corporate 20.6 4.1
-------- --------
TOTAL PROPERTY, PLANT AND EQUIPMENT
$ 590.6 $ 503.5
======== ========
</TABLE>
<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS: DECEMBER 31, 1999 JANUARY 1, 1999
----------------- ---------------
<S> <C> <C>
North America $ 219.8 $ 202.2
Europe 315.2 193.7
Asia Pacific 66.9 85.9
Central and South America 529.2 488.5
Corporate 85.1 63.7
-------- --------
TOTAL ASSETS $1,216.2 $1,034.0
======== ========
</TABLE>
F-39
<PAGE> 93
FRESH DEL MONTE PRODUCE INC.
AND SUBSIDIARIES
-------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
23. BUSINESS SEGMENT DATA (continued)
Fresh Del Monte's earnings are heavily dependent on operations located
worldwide. These operations are a significant factor in the economies of some of
the countries Fresh Del Monte operates and are subject to the risks that are
inherent in operating in such countries, including government regulations,
currency and ownership restrictions and risk of expropriation.
Fresh Del Monte has three principal sales agreements for the distribution of its
fresh produce, which principally cover sales in the European and Japanese
markets. Sales made through these agreements approximated 21%, 21% and 26% of
total net sales for 1999, 1998 and 1997, respectively.
Identifiable assets by geographic area represent those assets used in the
operations of each geographic area. Corporate assets consist of an allocation of
goodwill, leasehold improvements and furniture and fixtures.
24. SUBSEQUENT EVENT
On February 9, 2000, Fresh Del Monte entered into a revolving credit agreement
with Rabobank International, New York Branch, as agent. This revolving credit
agreement permits borrowings up to $25.0 million, bears interest at LIBOR plus
2.75% and terminates on August 9, 2000. The revolving credit agreement is
unsecured and contains covenants which require Fresh Del Monte to maintain
certain minimum financial ratios. There have been no borrowings under this
credit agreement up to the date of this report.
F-40
<PAGE> 94
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Fresh Del Monte Produce Inc.
We have audited the consolidated financial statements of Fresh Del Monte Produce
Inc. and subsidiaries as of December 31, 1999 and January 1, 1999, and for each
of the three years in the period ended December 31, 1999, and have issued our
report thereon dated February 14, 2000 (included elsewhere in this Form 20-F).
Our audits also included the financial statement schedule listed in Item 19 of
this Form 20-F. This schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
Miami, Florida
February 14, 2000
S-1
<PAGE> 95
Schedule II - Valuation and Qualifying Accounts
Fresh Del Monte Produce Inc.
and Subsidiaries
(U.s. Dollars in millions)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
----------- -------------------- --------------------------------- --------- -------------
Additions
--------------------------------
Balance at Beginning Charged to Costs Charged to other Balance at
Description of period and Expenses Accounts Deduction End of Period
----------- -------------------- ---------------- ---------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Period ended December 31, 1999:
Deducted from asset accounts:
Valuation accounts:
Trade accounts receivable $ 8.5 $ 2.8 $ 0.0 $ (1.4) $ 9.9
Advances to growers and other
receivables 2.6 2.7 0.0 (0.8) 4.5
Deferred tax asset valuation 14.2 7.0 0.0 0.0 21.2
-------- -------- -------- -------- --------
Total $ 25.3 $ 12.5 $ 0.0 $ (2.2) $ 35.6
======== ======== ======== ======== ========
Period ended January 1, 1999:
Deducted from asset accounts:
Valuation accounts:
Trade accounts receivable $ 5.0 $ 3.3 $ 0.3 $ (0.1) $ 8.5
Advances to growers and other
receivables 3.1 1.2 (0.2) (1.5) 2.6
Deferred tax asset valuation 36.5 0.0 0.0 (22.3) 14.2
-------- -------- -------- -------- --------
Total $ 44.6 $ 4.5 $ 0.1 $ (23.9) $ 25.3
======== ======== ======== ======== ========
Period ended December 26, 1997:
Deducted from asset accounts:
Valuation accounts:
Trade accounts receivable $ 5.8 $ 4.3 $ (0.1) $ (5.0) $ 5.0
Advances to growers and other
receivables 2.8 0.4 0.6 (0.7) 3.1
Investments in and advances to
unconsolidated companies 4.8 0.0 0.5 (5.3) 0.0
Deferred tax asset valuation 42.7 0.0 0.0 (6.2) 36.5
-------- -------- -------- -------- --------
Total $ 56.1 $ 4.7 $ 1.0 $ (17.2) $ 44.6
======== ======== ======== ======== ========
</TABLE>
S-2
<PAGE> 1
EXHIBIT 2.1
FOURTH AMENDMENT AND CONSENT
Dated as of May 20, 1999
This AMENDMENT AND CONSENT among Del Monte Fresh Produce (UK) Ltd.
("Fresh U.K."), Wafer Limited ("Wafer"), Del Monte Fresh Produce International
Inc. ("Fresh International"), Del Monte Fresh Produce N.A., Inc. ("Fresh N.A.")
Fresh Del Monte Produce Inc. ("Fresh Produce"), Global Reefer Carriers, Ltd.
("Global; collectively with Fresh U.K., Wafer, Fresh International, Fresh N.A.
and Fresh Produce, the "Borrowers"), the banks, financial institutions and other
institutional lenders a party to the Credit Agreement referred to below (the
"Lenders"), the Initial Issuing Bank (as defined in the Credit Agreement), the
Swing Line Bank (as defined in the Credit Agreement) and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as
syndication agent, administrative agent and collateral agent (in its capacity as
administrative agent, the "Agent").
PRELIMINARY STATEMENTS. The Borrowers, the Agent, the Issuing Bank, the
Swing Line Bank and the Lenders have entered into a Revolving Credit Agreement
dated as of May 19, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"; the terms defined in the Credit Agreement
being used herein as therein defined). Each of the Borrowers, the Agent, the
Issuing Bank, the Swing Line Bank and the Lenders wish to amend the Credit
Agreement as hereinafter set forth.
NOW, THEREFORE, the Borrowers, the Agent, Issuing Bank, Swing Line Bank
and the Lenders hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, hereby amended as follows:
(a) Section 5.02(a)(vii) of the Credit Agreement is hereby amended by
deleting the amount "$10,000,000" appearing therein and substituting in lieu
thereof the amount "$20,000,000".
(b) Section 5.02(a) of the Credit Agreement is hereby amended by adding
the following clause (ix) at the end thereof:
"(ix) Liens securing Debt under Capitalized Leases for refrigeration
containers in an aggregate principal amount not to exceed $60,000,000."
(c) Section 5.02(b)(vi) of the Credit Agreement is hereby amended by
deleting the words "or 5.02(a)(vii)" and substituting in lieu thereof the words
", 5.02(a)(vii) or 5.02(a)(ix)".
<PAGE> 2
SECTION 2. CONSENT TO INCREASE OF COMMITMENTS. The Lenders hereby
consent to increasing the Total Commitment from $378,250,000 to an amount not to
exceed $450,000,000 (the "Commitment Increase"). The Lenders hereby authorize
the Agent to execute on their behalf any amendments and other documentation the
Agent reasonably determines to be necessary in connection with the Commitment
Increase (the "Increase Documentation"); it being expressly understood that no
Lender shall be obligated to increase its Commitment and that no increase in the
Commitment of any Lender shall be effective unless such Lender has executed the
Increase Documentation.
SECTION 3. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective when, and only when, the Agent shall have received, in form and
substance satisfactory to the Agent:
(a) counterparts of this Amendment executed by each Borrower and each
Lender;
(b) consents duly executed by each Guarantor in the form of Exhibit A
hereto; and
(c) an amendment fee in the amount of $194,500, for the ratable account
of the Lenders.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. The
Borrowers represent and warrant as follows:
(a) The representations and warranties contained in Section 4.01 of the
Credit Agreement, are true and correct on and as of the date hereof as though
made on and as of the date hereof, other than such representations and
warranties that, by their terms, refer to a date other than the date of this
Amendment or a Borrowing; provided that such representation and warranty shall
be deemed to be updated by such information relating to the matters described
therein as and to the extent that Fresh Produce or the relevant Borrower shall
have furnished such information in writing to the Administrative Agent.
(b) The execution, delivery and performance by the Borrowers of this
Amendment, and the Credit Agreement, as amended hereby, are within each
Borrowers' powers, have been duly authorized by all necessary action and do not
contravene (i) any Borrower's charter or by-laws, or equivalent governing
documentation, as applicable, or (ii) any law or contractual restriction binding
on or affecting any Borrower, or result in, or require, the creation of any
lien, security interest or other charge or encumbrance upon or with respect to
any of its properties.
(c) No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by any Borrower of this Amendment or the
Credit Agreement, as amended hereby.
2
<PAGE> 3
(d) This Amendment and the Credit Agreement, as amended hereby,
constitute, legal, valid and binding obligations of the Borrowers enforceable
against the Borrowers in accordance with their respective terms, subject,
however, to the effect on such enforceability of (i) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and (ii) general principles of equity (regardless whether such
enforceability is considered in a proceeding in equity or at law).
(e) No event has occurred and is continuing which constitutes an Event
of Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
SECTION 5. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT. (a) Upon
the effectiveness of Section 1 hereof, on and after the date hereof, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the Credit
Agreement as amended hereby, and each reference in the Notes and the other Loan
Documents to the Credit Agreement shall mean and be a reference to the Credit
Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement and the
Notes shall remain in full force and effect and are hereby ratified and
confirmed in all respects.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Lenders under the Credit Agreement, nor constitute a
waiver of any provision of the Credit Agreement.
SECTION 6. COSTS, EXPENSES AND TAXES. The Borrowers agrees, jointly and
severally, to pay on demand all costs and expenses of the Agent in connection
with the preparation, execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect thereto and all costs and expenses, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent, with respect to advising the Agent as to its rights and responsibilities
hereunder and thereunder thereto (such costs and expenses not to exceed $5,000).
In addition, the Borrowers agree, jointly and severally, to pay any and all
stamp and other taxes payable or determined to be payable in connection with the
execution and delivery of this Amendment and the other instruments and documents
to be delivered hereunder, and agrees to save the Agent and the Lenders harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
3
<PAGE> 4
SECTION 8. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws (without giving effect to the conflicts
of laws principles thereof) of the State of New York.
SECTION 9. FINAL AGREEMENT. This Amendment represents the final
agreement between the Borrowers, the Agent and the Lenders as to the subject
matter hereof and may not be contradicted by evidence of prior, contemporaneous
or subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWERS:
DEL MONTE FRESH PRODUCE (UK)
LTD.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
WAFER LIMITED
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
DEL MONTE FRESH PRODUCE
INTERNATIONAL INC.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
DEL MONTE FRESH PRODUCE N.A., INC.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
FRESH DEL MONTE PRODUCE INC.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
4
<PAGE> 5
GLOBAL REEFER CARRIERS LTD.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
LENDERS:
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as
Agent and as a Lender
By: /s/ Ron Klein
-----------------------------------
Title Vice President
---------------------------------
By: /s/ Nancy J. McIver
-----------------------------------
Title Managing Director
---------------------------------
CHRISTIANIA BANK
OG KREDITKASSE ASA, NEW YORK BRANCH
By: /s/ Martin Lunder
-----------------------------------
Title Senior Vice President
----------------------
By: /s/ Carl Petter Svendban
-----------------------------------
Title Senior Vice President
---------------------------------
FIRST UNION NATIONAL BANK
By: /s/ Mary A. Morgan
-----------------------------------
Title Senior Vice President
---------------------------------
UNION BANK OF CALIFORNIA, N.A.
By: /s/
-----------------------------------
Title
---------------------------------
5
<PAGE> 6
ABN AMRO BANK N.V. NEW YORK BRANCH
By: /s/
-----------------------------------
Title
---------------------------------
BANQUE FRANCAISE DE L'ORIENT
By: /s/
-----------------------------------
Title
---------------------------------
NATIONSBANK N.A.
By: /s/ Casey Cosgrove
-----------------------------------
Title Vice President
---------------------------------
WACHOVIA BANK
By: /s/
-----------------------------------
Title
---------------------------------
AGFIRST FARM CREDIT BANK
By: /s/
-----------------------------------
Title
---------------------------------
THE FUJI BANK, LIMITED
By: /s/
-----------------------------------
Title
---------------------------------
6
<PAGE> 7
DEUTSCHE FINANCIAL SERVICES
By: /s/
--------------------------------------
Title
------------------------------------
BARCLAYS BANK, PLC
By: /s/ Matthew Tuck
--------------------------------------
Title Associate Director & Vice President
------------------------------------
HARRIS TRUST AND SAVINGS BANK
By: /s/
--------------------------------------
Title
------------------------------------
BANQUE NATIONALE DE PARIS
By: /s/
--------------------------------------
Title
------------------------------------
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/
--------------------------------------
Title
------------------------------------
7
<PAGE> 8
EXHIBIT A
CONSENT
Dated as of May __, 1999
The undersigned, as Guarantor under its respective Guaranty dated as of
May 19, 1998 (with respect to each such Guarantor, its "Guaranty") in favor of
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW
YORK BRANCH, hereby consents to the foregoing amendment dated as of the date
hereof and hereby confirms and agrees that its Guaranty is, and shall continue
to be, in full force and effect and is hereby ratified and confirmed in all
respects except that, upon the effectiveness of, and on and after the date of,
the said amendment, all references in its Guaranty to the Credit Agreement
referred to in the said amendment, "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean the Credit Agreement as
amended by the said amendment.
DEL MONTE FRESH PRODUCE (UK) LTD.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
WAFER LIMITED
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
DEL MONTE FRESH PRODUCE INTERNATIONAL INC.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
DEL MONTE FRESH PRODUCE N.A., INC.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
A-1
<PAGE> 9
FRESH DEL MONTE PRODUCE INC.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
GLOBAL REEFER CARRIERS LTD.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
FRESH DEL MONTE PRODUCE, N.V.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
DEL MONTE FRESH PRODUCE B.V
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
DEL MONTE FRESH PRODUCE (ASIA-PACIFIC) LIMITED
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
CLAVERTON LIMITED
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
A-2
<PAGE> 10
DEL MONTE BVI LIMITED
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
COMPANIA DE DESARROLLO BANANERO DE
GUATAMALA, S.A.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
DEL MONTE FRESH PRODUCE COMPANY
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
FDM HOLDINGS LIMITED
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
CORPORACION DE DESSARROLLO BANANERO DE
COSTA RICA, S.A.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
CORPORACION DE DESSARROLLO AGRICOLA DEL
MONTE, S.A.
By: /s/ John F. Inserra
-----------------------------------
Title
---------------------------------
A-3
<PAGE> 1
EXHIBIT 2.2
FIFTH AMENDMENT
Dated as of May __, 1999
This FIFTH AMENDMENT among Del Monte Fresh Produce (UK) Ltd. ("Fresh
U.K."), Wafer Limited ("Wafer"), Del Monte Fresh Produce International Inc.
("Fresh International"), Del Monte Fresh Produce N.A., Inc. ("Fresh N.A.") Fresh
Del Monte Produce Inc. ("Fresh Produce"), Global Reefer Carriers, Ltd. ("Global;
collectively with Fresh U.K., Wafer, Fresh International, Fresh N.A. and Fresh
Produce, the "Borrowers"), the banks appearing on the signature pages hereto
(the "Increasing Lenders") and Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", New York Branch, as agent (in such capacity, the
"Agent") for the other banks, financial institutions and other institutional
lenders a party to the Credit Agreement referred to below (the "Lenders").
PRELIMINARY STATEMENTS. The Borrowers, the Agent and the Lenders have
entered into a Revolving Credit Agreement dated as of May 19, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
the terms defined in the Credit Agreement being used herein as therein defined).
Each of the Borrowers, the Agent, the Initial Issuing Bank, the Swing Line Bank
and the Lenders wish to amend the Credit Agreement as hereinafter set forth.
NOW, THEREFORE, the Borrowers, the Agent (on behalf of the Lenders) and
the Increasing Lenders hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended by deleting
the amount "$389,000,000" appearing in the definition of "Total Commitment" and
substituting in lieu thereof the amount "$450,000,000"; it being understood that
the Total Commitment, as amended, reflects the reduction on May 1, 1999 pursuant
to Section 2.05(c) of the Credit Agreement.
(b) Schedule I to the Credit Agreement is hereby replaced by Schedule I
hereto.
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective when, and only when, the Agent shall have received, in form and
substance satisfactory to the Agent:
(a) counterparts of this Amendment executed by each Borrower, the Agent
and each Increasing Lender;
<PAGE> 2
(b) a consent duly executed by each Guarantor in the form of Exhibit A
hereto; and
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. The
Borrowers represent and warrant as follows:
(a) The representations and warranties contained in Section 4.01 of the
Credit Agreement, are true and correct on and as of the date hereof as though
made on and as of the date hereof, other than such representations and
warranties that, by their terms, refer to a date other than the date of this
Amendment or a Borrowing; provided that such representation and warranty shall
be deemed to be updated by such information relating to the matters described
therein as and to the extent that Fresh Produce or the relevant Borrower shall
have furnished such information in writing to the Administrative Agent.
(b) The execution, delivery and performance by the Borrowers of this
Amendment, and the Credit Agreement, as amended hereby, are within each
Borrowers' powers, have been duly authorized by all necessary action and do not
contravene (i) any Borrower's charter or by-laws, or equivalent governing
documentation, as applicable, or (ii) any law or contractual restriction binding
on or affecting any Borrower, or result in, or require, the creation of any
lien, security interest or other charge or encumbrance upon or with respect to
any of its properties.
(c) No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by any Borrower of this Amendment or the
Credit Agreement, as amended hereby.
(d) This Amendment and the Credit Agreement, as amended hereby,
constitute, legal, valid and binding obligations of the Borrowers enforceable
against the Borrowers in accordance with their respective terms, subject,
however, to the effect on such enforceability of (i) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and (ii) general principles of equity (regardless whether such
enforceability is considered in a proceeding in equity or at law).
(e) No event has occurred and is continuing which constitutes an Event
of Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
SECTION 4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT. (a) Upon
the effectiveness of Section 1 hereof, on and after the date hereof, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the Credit
Agreement as amended hereby, and each reference in the Notes and the other Loan
Documents to the Credit Agreement shall mean and be a reference to the Credit
Agreement as amended hereby.
2
<PAGE> 3
(b) Except as specifically amended above, the Credit Agreement and the
Notes shall remain in full force and effect and are hereby ratified and
confirmed in all respects.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Lenders under the Credit Agreement, nor constitute a
waiver of any provision of the Credit Agreement.
SECTION 5. INCREASING LENDERS. (a) Each Increasing Lenders (i)
confirms that it has received a copy of the Credit Agreement, together with
copies of financial statements and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Amendment; (ii) agrees that it will, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as they shall deem appropriate at the time, continue to make their
own credit decisions in taking or not taking action under the Credit Agreement;
(iii) appoints and authorizes each Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Credit Agreement as
are delegated to the Agents by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of the Credit Agreement are required to be performed by is as a Lender; and (v)
attach any U.S. Internal Revenue Service forms required under Section 2.12 of
the Credit Agreement.
(b) Upon the effectiveness of this Amendment, the Increasing
Lenders shall (a) if not already a Lender, be a party to the Credit Agreement
and the rights and obligations of a Lender thereunder and (ii) have a Commitment
in the amount set forth opposite such Increasing Lender's name on Schedule I to
the Credit Agreement under the Caption "Commitment", as such Schedule has been
amended by the terms of this Amendment.
SECTION 6. COSTS, EXPENSES AND TAXES. The Borrowers agrees, jointly and
severally, to pay on demand all costs and expenses of the Agent in connection
with the preparation, execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect thereto and with respect to advising the Agent as to its
rights and responsibilities hereunder and thereunder. In addition, the Borrowers
agree, jointly and severally, to pay any and all stamp and other taxes payable
or determined to be payable in connection with the execution and delivery of
this Amendment and the other instruments and documents to be delivered
hereunder, and agrees to save the Agent and the Lenders harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.
SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
3
<PAGE> 4
SECTION 8. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws (without giving effect to the conflicts
of laws principles thereof) of the State of New York.
SECTION 9. FINAL AGREEMENT. This Amendment represents the final
agreement between the Borrowers, the Agent and the Lenders as to the subject
matter hereof and may not be contradicted by evidence of prior, contemporaneous
or subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWERS:
DEL MONTE FRESH PRODUCE (UK)
LTD.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
WAFER LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE
INTERNATIONAL INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE N.A., INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
FRESH DEL MONTE PRODUCE INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
GLOBAL REEFER CARRIERS LTD.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
5
<PAGE> 6
AGENT:
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH,
as Agent and as a Lender
By: /s/
---------------------------------------
Title
-------------------------------------
LENDERS:
WACHOVIA BANK
By: /s/
---------------------------------------
Title
-------------------------------------
AG FIRST FARM CREDIT BANK
By: /s/
---------------------------------------
Title
-------------------------------------
DEUTSCHE FINANCIAL SERVICES
By: /s/
---------------------------------------
Title
-------------------------------------
BARCLAYS BANK, PLC
By: /s/
---------------------------------------
Title
-------------------------------------
BANQUE FRANCAISE DE L'ORIENT
By: /s/
---------------------------------------
Title
-------------------------------------
6
<PAGE> 7
SCHEDULE I
COMMITMENTS AND LENDING OFFICES
<TABLE>
<CAPTION>
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
DOMESTIC EURODOLLAR
LENDER COMMITMENT LENDING OFFICE LENDING OFFICE
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
<S> <C> <C> <C>
Cooperatieve Centrale $66,516,594.76 245 Park Avenue 245 Park Avenue
Raiffeisen-Boerenleenbank B.A., New York, New York 10167 New York, New York 10167
"Rabobank Nederland", New York Branch
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
First Union National Bank, $44,596,133.40 200 S. Biscayne Boulevard Miami, 200 S. Biscayne Boulevard
Florida 33131 Miami, Florida 33131
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Nationsbank N.A $41,768,634.78 901 Main Street 901 Main Street
Dallas, Texas 75202 Dallas, Texas 75202
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Harris Trust And Savings Bank, $34,872,483.02 111 West Monroe Street Chicago, 111 West Monroe Street
Illinois 60603 Chicago, Illinois 60603
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Wachovia Bank N.A $40,000,000.00 191 Peachtree Street 191 Peachtree Street
Atlanta, Georgia 30303 Atlanta, Georgia 30303
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
The Fuji Bank, Limited $18,551,335.84 Two World Trade Center, Two World Trade Center, 79th Floor
79th Floor New York, New York 10048
New York New York 10048
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
ABN AMRO Bank N.V. New York Branch $23,562,488.52 500 Park Avenue, 500 Park Avenue,
New York, New York 10022 New York, New York 10022
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Deutsche Financial Services $30,000,000.00 3225 Cumberland Blvd. 3225 Cumberland Blvd.
Suite 700 Suite 700
Atlanta Georgia 30339 Atlanta Georgia 30339
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Banque Francaise De L'Orient. $22,500,000.00 30 Avenue George V 75008, Paris, 30 Avenue George V 75008, Paris,
France France
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Agfirst Farm Credit Bank, $20,000,000.00 1401 Hampton Street 1401 Hampton Street
Columbia South Carolina 29202 Columbia South Carolina 29202
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Barclays Bank, PLC $18,800,000.00 222 Broadway, 222 Broadway
New York, New York 10038 New York, New York 10038
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Banque Nationale de Paris, Chicago $14,585,475.58 209 S. LaSalle Street 209 S. LaSalle Street
Branch, Chicago, Illinois 60604 Chicago, Illinois 60604
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Christiania Bank OG Kreditkasse ASA, $9,424,995.41 11 W 42nd Street, 7th Floor 11 W 42nd Street, 7th Floor New
New York Branch New York, New York 10036 York, New York 10036
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Union Bank Of California, N.A $ 14,137,493.11 550 S. Hope Street 550 S. Hope Street
Los Angeles, California 90071 Los Angeles, California 90071
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
Suntrust Bank Central Florida, N.A. $ 14,585,475.58 200 South Orange Avenue 200 South Orange Avenue
Orlando, Florida 32801 Orlando, Florida 32801
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
TOTAL COMMITMENT $413,901,110.00
- --------------------------------------- ------------------- ---------------------------------- -----------------------------------
</TABLE>
<PAGE> 8
EXHIBIT A
CONSENT
Dated as of May __, 1999
The undersigned, [NAME OF GUARANTOR], a company organized and existing
under the laws of , as Guarantor under the Guaranty dated as of May 19, 1998
(the "Guaranty") in favor of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, hereby consents to the foregoing
amendment dated as of the date hereof and hereby confirms and agrees that the
Guaranty is, and shall continue to be, in full force and effect and is hereby
ratified and confirmed in all respects except that, upon the effectiveness of,
and on and after the date of, the said amendment, all references in the Guaranty
to the Credit Agreement referred to in the said amendment, "thereunder",
"thereof" or words of like import referring to the Credit Agreement shall mean
the Credit Agreement as amended by the said amendment.
[NAME OF GUARANTOR]
By:______________________
Name:
Title:
A-1
<PAGE> 9
CONSENT
Dated as of May _, 1999
The undersigned, as Guarantor under its respective Guaranty dated as of
May 19, 1998 (with respect to each such Guarnator, its "Guaranty") in favor of
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW
YORK BRANCH, hereby consents to the foregoing amendment dated as of the date
hereof and hereby confirms and agrees that the Guaranty is, and shall continue
to be, in full force and effect and is hereby ratified and confirmed in all
respects except that, upon the effectiveness of, and on and after the date of,
the said amendment, all references in the Guaranty to the Credit Agreement
referred to in the said amendment, "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean the Credit Agreement as
amended by the said amendment.
DEL MONTE FRESH PRODUCE (UK) LTD.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
WAFER LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE INTERNATIONAL INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE N.A., INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
A-2
<PAGE> 10
FRESH DEL MONTE PRODUCE INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
GLOBAL REEFER CARRIERS LTD.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
FRESH DEL MONTE PRODUCE, N.V.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE, B.V.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE, (ASIA PACIFIC)
LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
CLAVERTON LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE BVI LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
A-3
<PAGE> 11
COMPANIA DE DESARROLLO BANANERO DE
GUATAMALA, S.A
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE COMPANY
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
FDM HOLDINGS LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
CORPORACION DE DESARROLLO AGRICOLA DEL
MONTE, S.A.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
A-4
<PAGE> 1
EXHIBIT 2.3
SIXTH AMENDMENT AND CONSENT
Dated as of June 28, 1999
This SIXTH AMENDMENT among Del Monte Fresh Produce (UK) Ltd. ("Fresh
U.K.") Wafer Limited ("Wafer"), Del Monte Fresh Produce International Inc.
("Fresh International"), Del Monte Fresh Produce N.A., Inc. ("Fresh N.A."),
Fresh Del Monte Produce Inc. ("Fresh Produce"), Global Reefer Carriers, Ltd.
("Global; collectively with Fresh U.K., Wafer, Fresh International, Fresh N.A.
and Fresh Produce, the "Borrowers'), the banks appearing on the signature pages
hereto (the "Increasing Lenders") and Cooperatieve Centrale
Raiffeisen-Bocrenleenbank B.A., "Rabobank Nederland", New York Branch, as agent
(in such capacity, the "Agent") for the other banks, financial institutions and
other institutional lenders a party to the Credit Agreement referred to below
(the "Lenders").
PRELIMINARY STATEMENTS. The Borrowers, the Agent and the Lenders have
entered into a Revolving Credit Agreement dated as of May 19, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
the terms defined in the Credit Agreement being used herein as therein defined).
Each of the Borrowers, the Agent, the Initial Issuing Bank, the Swing Line Bank
and the Lenders wish to amend the Credit Agreement as hereinafter set forth.
NOW, THEREFORE, the Borrowers, the Agent (on behalf of the Lenders) and
the Increasing Lenders hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended by deleting
the amount "$413,901,110.00" appearing in the definition of "Total Commitment"
and substituting in lieu thereof the amount "$438,901,110.00"; it being
understood that the Total Commitment, as amended, reflects the reduction on May
1, 1999 pursuant to Section 2.05(c) of the Credit Agreement.
(b) Schedule I to the Credit Agreement is hereby replaced by Schedule I
hereto.
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective when, and only when, the Agent shall have received, in form and
substance satisfactory to the Agent:
(a) counterparts of this Amendment executed by each Borrower, the Agent
and each Increasing Lender,
(b) a consent duly executed by each Guarantor in the form of Exhibit A
hereto; and
<PAGE> 2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. The
Borrowers represent and warrant as follows:
(a) The representations and warranties contained in Section 4.01 of the
Credit Agreement, are true and correct on and as of the date hereof as though
made on and as of the date hereof, other than such representations and
warranties that, by their terms, refer to a date other than the date of this
Amendment or a Borrowing; provided that such representation and warranty shall
be deemed to be updated by such information relating to the matters described
therein as and to the extent that Fresh Produce or the relevant Borrower shall
have furnished such information in writing to the Administrative Agent.
(b) The execution, delivery and performance by the Borrowers of this
Amendment, and the Credit Agreement, as amended hereby, are within each
Borrowers' powers, have been duty authorized by all necessary action and do not
contravene (i) any Borrower's charter or by-laws, or equivalent governing
documentation, as applicable, or (ii) any law or contractual restriction binding
on or affecting any Borrower, or result in, or require, the creation of any
lien, security interest or other charge or encumbrance upon or with respect to
any of its properties.
(c) No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by any Borrower of this Amendment or the
Credit Agreement, as amended hereby.
(d) This Amendment and the Credit Agreement, as amended hereby,
constitute, legal, valid and binding obligations of the Borrowers enforceable
against the Borrowers in accordance with their respective terms, subject,
however, to the effect on such enforceability of (i) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and (ii) general principles of equity (regardless whether such
enforceability is considered in a proceeding in equity or at law).
(e) No event has occurred and is continuing which constitutes an Event
of Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
SECTION 4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMNT. (a) Upon
the effectiveness of Section I hereof, on and after the date hereof, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the Credit
Agreement as amended hereby, and each reference in the Notes and the other Loan
Documents to the Credit Agreement shall mean and be a reference to the Credit
Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement and the
Notes shall remain in full force and effect and are hereby ratified and
confirmed in all respects.
(c) The execution, delivery and effectiveness of this Amendment shall
not except as expressly provided herein, operate as a waiver of any right, power
or remedy of the Lenders under the Credit Agreement, nor constitute a waiver of
any provision of the Credit Agreement.
2
<PAGE> 3
SECTION 5. INCREASING LENDERS. (a) Each Increasing Lenders (i) confirms
that it has received a copy of the Credit Agreement, together with copies of
financial statements and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Amendment; (ii) agrees that it will, independently and without reliance upon the
Agents or any other Lender and based on such documents and information as they
shall deem appropriate at the time, continue to make their own credit decisions
in taking or not taking action under the Credit Agreement; (iii) appoints and
authorizes each Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to the
Agents by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto; (iv) agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Lender, and (v) attach any
U.S. Internal Revenue Service forms required under Section 2.12 of the Credit
Agreement
(b) Upon the effectiveness of this Amendment, the Increasing Lenders
shall (a) if not already a Lender, be a party to the Credit Agreement and the
rights and obligations of a Lender thereunder and (ii) have a Commitment in the
amount set forth opposite such Increasing Lender's name on Schedule I to the
Credit Agreement under the Caption "Commitment", as such Schedule has been
amended by the terms of this Amendment.
SECTION 6. COSTS, EXPENSES AND TAXES. The Borrowers agree, jointly and
severally, to pay on demand all costs and expenses of the Agent in connection
with the preparation, execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect thereto and with respect to advising the Agent as to its
rights and responsibilities hereunder and thereunder. in addition, the Borrowers
agree, jointly and severally, to pay any and all stamp and other taxes payable
or determined to be payable in connection with the execution and delivery of
this Amendment and the other instruments and documents to be delivered
hereunder, and agrees to save the Agent and the Lenders harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.
SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
SECTION 8. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws (without giving effect to the conflicts
of laws principles thereof) of the State of New York.
SECTION 9. FINAL AGREEMENT. This Amendment represents the final
agreement between the Borrowers, the Agent and the Lenders as to the subject
matter hereof and may not be contradicted by evidence of prior, contemporaneous
or subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duty authorized, as of the
date first above written.
BORROWERS:
DEL MONTE FRESH PRODUCE (UK) LTD.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
WAFER LIMITED
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
DEL MONTE FRESH PRODUCE
INTERNATIONAL INC.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
DEL MONTE FRESH PRODUCE N.A., INC.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
FRESH DEL MONTE PRODUCE INC.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
GLOBAL REEFER CARRIERS LTD.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
4
<PAGE> 5
AGENT:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH, as Agent
and as a Lender
By: /s/ J. Weston Bass
--------------------------------------
Title: Managing Director
----------------------------------
By: /s/ Chris G. Kortlandt
--------------------------------------
Title: Vice President
----------------------------------
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/
--------------------------------------
Title:
----------------------------------
U.S. BANCORP AG CREDIT, INC
By: /s/
--------------------------------------
Title:
----------------------------------
5
<PAGE> 6
AGENT:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH, as Agent
and as a Lender
By: /s/
--------------------------------------
Title:
----------------------------------
By: /s/
--------------------------------------
Title:
----------------------------------
LENDERS:
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/ Wm. C. Many
--------------------------------------
Title: First Vice President
----------------------------------
U.S. BANCORP AG CREDIT, INC
By: /s/
--------------------------------------
Title:
----------------------------------
6
<PAGE> 7
AGENT:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH, as Agent
and as a Lender
By: /s/
--------------------------------------
Title:
----------------------------------
By: /s/
--------------------------------------
Title:
----------------------------------
LENDERS:
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/
--------------------------------------
Title:
----------------------------------
U.S. BANCORP AG CREDIT, INC
By: /s/
--------------------------------------
Title: Vice President
----------------------------------
7
<PAGE> 8
CONSENT
Dated as of June___, 1999
The undersigned, as Guarantor under its respective Guaranty dated as
of May 19, 1998 (with respect to each such Guarantor, its "Guaranty") in favor
of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND"
NEW YORK BRANCH, hereby consents to the foregoing amendment dated as of the
date' hereof and hereby confirms and agrees that its Guaranty is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects except that, upon the effectiveness of, and on and after the date
of, the said amendment, all references in its Guaranty to the Credit Agreement
referred to in the said amendment, "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean the Credit Agreement as
amended by the said amendment.
DEL MONTE FRESH PRODUCE (UK) LTD.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
WAFER LIMITED
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
DEL MONTE FRESH PRODUCE
INTERNATIONAL INC.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
DEL MONTE FRESH PRODUCE N.A., INC.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
FRESH DEL MONTE PRODUCE INC.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
8
<PAGE> 9
GLOBAL REEFER CARRIERS LTD.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
FRESH DEL MONTE PRODUCE, N.V.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
FRESH DEL MONTE PRODUCE, B.V.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
FRESH DEL MONTE PRODUCE (ASIA-PACIFIC)
LIMITED
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
CLAVERTON LIMITED
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
DEL MONTE BVI LIMITED
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
9
<PAGE> 10
COMPANIA DE DESARROLLO BANANERO
DE GUATAMALA, S.A.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
DEL MONTE FRESH PRODUCE COMPANY
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
CORPORACION DE DESSARROLLO
AGRICOLA DEL MONTE, S.A.
By: /s/ John F. Inserra
--------------------------------------
Title:
----------------------------------
10
<PAGE> 11
SCHEDULE I
COMMITMENTS AND LENDING OFFICES
<TABLE>
<CAPTION>
DOMESTIC EURODOLLAR
LENDER COMMITMENT LENDING OFFICE LEADING OFFICE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cooperatieve Centrale Raiffeisen- $66,516,594.76 245 Park Avenue 245 Park Avenue
Boerenleenbank B.A., "Rabobank New York, New York 10167 New York, New York 10167
Nederland", New York Branch
- ----------------------------------------------------------------------------------------------------------------------------------
First Union National Bank $44,596,133.40 200 S. Biscayne Boulevard 200 S. Biscayne Boulevard
Miami, Florida 33131 Miami, Florida 33131
- ----------------------------------------------------------------------------------------------------------------------------------
Nationsbank NA $41,768,634.78 901 Main Street 901 Main Street
Dallas, Texas 75202 Dallas, Texas 75202
- ----------------------------------------------------------------------------------------------------------------------------------
Harris Trust And Savings Bank $34,872,483.02 111 West Monroe Street 111 West Monroe Street
Chicago, Illinois 60603 Chicago, Illinois 60603
- ----------------------------------------------------------------------------------------------------------------------------------
Wachovia Bank N.A $40,000,000.00 191 Peachtree Street 191 Peachtree Street
Atlanta, Georgia 30303 Atlanta, Georgia 30303
- ----------------------------------------------------------------------------------------------------------------------------------
The Fuji Bank, Limited $18,551,335.94 Two World Trade Center, Two World Trade Center
79th Floor 79th Floor
New York, New York 10048 New York, New York 10048
- ----------------------------------------------------------------------------------------------------------------------------------
ABN AMRO Bank N.V. New York $23,562,488.52 500 Park Avenue, 500 Park Avenue
Branch New York, New York 10022 New York, New York 10022
- ----------------------------------------------------------------------------------------------------------------------------------
Deutsche Financial Services $30,000,000.00 3225 Cumberland Blvd. 3225 Cumberland Blvd
Atlanta Georgia 30339 Atlanta Georgia 30339
- ----------------------------------------------------------------------------------------------------------------------------------
Banque Francaise De L'Orient $22,500,000.00 30 Avenue George V 75008, 30 Avenue George V 75008,
Paris, France Paris, France
- ----------------------------------------------------------------------------------------------------------------------------------
Agfirst Farm Credit Bank $20,000,000.00 1401 Hampton Street 1401 Hampton Street
Columbia, South Carolina 29202 Columbia, South Carolina 29202
- ----------------------------------------------------------------------------------------------------------------------------------
Barclays Bank, PLC $18,800,000.00 222 Broadway 222 Broadway
Now York, New York 10038 New York, New York 10038
- ----------------------------------------------------------------------------------------------------------------------------------
Banque Nationale de Paris, Chicago $14,585,475.58 209 S. LaSalle Street 209 S. LaSalle Street
Branch Chicago, Illinois 60604 Chicago, Illinois 60604
- ----------------------------------------------------------------------------------------------------------------------------------
Christiania Bank OG Kreditkasse $9,424,995.41 11 W 42nd Street, 7th Floor 11 W 42nd Street 7th Floor
ASA, New York Branch New York, New York 10036 New York, New York 10036
- ----------------------------------------------------------------------------------------------------------------------------------
Union Bank Of California, N.A. $14,137,493.11 550 S. Hope Street 550 S. Hope Street
Los Angeles, California 90071 Los Angeles, California 90071
- ----------------------------------------------------------------------------------------------------------------------------------
Suntrust Bank Central Florida, N.A. $19,585,475.58 200 South Orange Avenue 200 South Orange Avenue
Orlando, Florida, 32801 Orlando, Florida 32801
- ----------------------------------------------------------------------------------------------------------------------------------
US Bancorp Ag Credit $20,000,000.00 950 17th Street 950 17th Street
Denver, Colorado Denver, Colorado
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMITMENT $438,901,110.00
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 2.4
SEVENTH AMENDMENT AND CONSENT
Dated as of August 2, 1999
This SEVENTH AMENDMENT among Del Monte Fresh Produce (UK) Ltd. ("Fresh
U.K."), Wafer Limited ("Wafer"), Del Monte Fresh Produce International Inc.
("Fresh International"), Del Monte Fresh Produce N.A., Inc. ("Fresh N.A."),
Fresh Del Monte Produce Inc. ("Fresh Produce"), Global Reefer Carriers, Ltd.
("Global; collectively with Fresh U.K., Wafer, Fresh International, Fresh N.A.
and Fresh Produce, the "Borrowers"), the banks appearing on the signature pages
hereto (the "Increasing Lenders") and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as agent
(in such capacity, the "Agent") for the other banks, financial institutions and
other institutional lenders a party to the Credit Agreement referred to below
(the "Lenders").
PRELIMINARY STATEMENTS. The Borrowers, the Agent and the Lenders have
entered into a Revolving Credit Agreement dated as of May 19, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
the terms defined in the Credit Agreement being used herein as therein defined).
Each of the Borrowers, the Agent, the Initial Issuing Bank, the Swing Line Bank
and the Lenders wish to amend the Credit Agreement as hereinafter set forth.
NOW, THEREFORE, the Borrowers, the Agent (on behalf of the Lenders) and
the Increasing Lenders hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended by deleting
the amount "$438,901,110.00" appearing in the definition of "Total Commitment"
and substituting in lieu thereof the amount "$450,000,000.00"; it being
understood that the Total Commitment, as amended, reflects the reduction on May
1, 1999 pursuant to Section 2.05(c) of the Credit Agreement.
(b) Schedule I to the Credit Agreement is hereby replaced by Schedule I
hereto.
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective when, and only when, the Agent shall have received, in form and
substance satisfactory to the Agent:
(a) counterparts of this Amendment executed by each Borrower, the Agent
and each Increasing Lender;
(b) a consent duly executed by each Guarantor in the form of Exhibit A
hereto
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. The
Borrowers represent and warrant as follows:
<PAGE> 2
(a) The representations and warranties contained in Section 4.01 of the
Credit Agreement, are true and correct on and as of the date hereof as though
made on and as of the date hereof, other than such representations and
warranties that, by their terms, refer to a date other than the date of this
Amendment or a Borrowing; provided that such representation and warranty shall
be deemed to be updated by such information relating to the matters described
therein as and to the extent that Fresh Produce or the relevant Borrower shall
have furnished such information in writing to the Administrative Agent.
(b) The execution, delivery and performance by the Borrowers of this
Amendment, and the Credit Agreement, as amended hereby, are within each
Borrowers' powers, have been duly authorized by all necessary action and do not
contravene (i) any Borrower's charter or by-laws, or equivalent governing
documentation, as applicable, or (ii) any law or contractual restriction binding
on or affecting any Borrower, or result in, or require, the creation of any
lien, security interest or other charge or encumbrance upon or with respect to
any of its properties.
(c) No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by any Borrower of this Amendment or the
Credit Agreement, as amended hereby.
(d) This Amendment and the Credit Agreement, as amended hereby,
constitute, legal, valid and binding obligations of the Borrowers enforceable
against the Borrowers in accordance with their respective terms, subject,
however, to the effect on such enforceability of (i) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and (ii) general principles of equity (regardless whether such
enforceability is considered in a proceeding in equity or at law).
(e) No event has occurred and is continuing which constitutes an Event
of Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
SECTION 4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT. (a) Upon
the effectiveness of Section 1 hereof, on and after the date hereof, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the Credit
Agreement as amended hereby, and each reference in the Notes and the other Loan
Documents to the Credit Agreement shall mean and be a reference to the Credit
Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement and the
Notes shall remain in full force and effect and are hereby ratified and
confirmed in all respects.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Lenders under the Credit Agreement, nor constitute a
waiver of any provision of the Credit Agreement.
SECTION 5. INCREASING LENDERS. (a) Each Increasing Lenders (i)
confirms that it has received a copy of the Credit Agreement, together with
copies of financial statements and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Amendment; (ii) agrees that it will, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as they shall deem appropriate at the time, continue to make their
2
<PAGE> 3
own credit decisions in taking or not taking action under the Credit Agreement;
(iii) appoints and authorizes each Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Credit Agreement as
are delegated to the Agents by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of the Credit Agreement are required to be performed by is as a Lender; and (v)
attach any U.S. Internal Revenue Service forms required under Section 2.12 of
the Credit Agreement.
(b) Upon the effectiveness of this Amendment, the Increasing
Lenders shall (a) if not already a Lender, be a party to the Credit Agreement
and the rights and obligations of a Lender thereunder and (ii) have a Commitment
in the amount set forth opposite such Increasing Lender's name on Schedule I to
the Credit Agreement under the Caption "Commitment", as such Schedule has been
amended by the terms of this Amendment.
SECTION 6. COSTS, EXPENSES AND TAXES. The Borrowers agree, jointly and
severally, to pay on demand all costs and expenses of the Agent in connection
with the preparation, execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect thereto and with respect to advising the Agent as to its
rights and responsibilities hereunder and thereunder. In addition, the Borrowers
agree, jointly and severally, to pay any and all stamp and other taxes payable
or determined to be payable in connection with the execution and delivery of
this Amendment and the other instruments and documents to be delivered
hereunder, and agrees to save the Agent and the Lenders harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.
SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
SECTION 8. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws (without giving effect to the conflicts
of laws principles thereof) of the State of New York.
SECTION 9. FINAL AGREEMENT. This Amendment represents the final
agreement between the Borrowers, the Agent and the Lenders as to the subject
matter hereof and may not be contradicted by evidence of prior, contemporaneous
or subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWERS:
DEL MONTE FRESH PRODUCE (UK)
LTD.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
3
<PAGE> 4
WAFER LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE
INTERNATIONAL INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE N.A., INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
FRESH DEL MONTE PRODUCE INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
GLOBAL REEFER CARRIERS LTD.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
AGENT:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH, as Agent and as a Lender
By: /s/ Ellen M. Tackling
---------------------------------------
Title Vice President Credit Control
-------------------------------------
4
<PAGE> 5
By: /s/ Chris G. Kortlandt
---------------------------------------
Title Vice President
-------------------------------------
LENDERS:
BANQUE ARTESIA NEDERLAND N.V.
By: /s/
---------------------------------------
Title
-------------------------------------
ARTESIA BANK LUXEMBOURG
By: /s/ Fred T. Matyn
---------------------------------------
Title General Manager
-------------------------------------
By: /s/ Maureen Ford
---------------------------------------
Title Managing Director
-------------------------------------
5
<PAGE> 6
SCHEDULE I
COMMITMENTS AND LENDING OFFICES
<TABLE>
<CAPTION>
- ------------------------------------------- ------------------ ----------------------------------- ---------------------------------
DOMESTIC EURODOLLAR
LENDER COMMITMENT LENDING OFFICE LENDING OFFICE
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
<S> <C> <C> <C>
Cooperatieve Centrale $66,516,594.76 245 Park Avenue 245 Park Avenue
Raiffeisen-Boerenleenbank B.A., "Rabobank New York, New York 10167 New York, New York 10167
Nederland", New York Branch
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
First Union National Bank, $44,596,133.40 200 S. Biscayne Boulevard Miami, 200 S. Biscayne Boulevard
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Nationsbank N.A $41,768,634.78 901 Main Street 901 Main Street
Dallas, Texas 75202 Dallas, Texas 75202
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Harris Trust And Savings Bank, $34,872,483.02 111 West Monroe Street Chicago, 111 West Monroe Street
Illinois 60603 Chicago, Illinois 60603
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Wachovia Bank N.A $40,000,000.00 191 Peachtree Street 191 Peachtree Street
Atlanta, Georgia 30303 Atlanta, Georgia 30303
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
The Fuji Bank, Limited $18,551,335.84 Two World Trade Center, Two World Trade Center
New York New York 10048 New York, New York 10048
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
ABN AMRO Bank N.V. New York Branch $23,562,488.52 500 Park Avenue, 500 Park Avenue,
New York, New York 10022 New York, New York 10022
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Deutsche Financial Services $30,000,000.00 3225 Cumberland Blvd. 3225 Cumberland Blvd.
Atlanta Georgia 30339 Atlanta Georgia 30339
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Banque Francaise De L'Orient. $22,500,000.00 30 Avenue George V 75008, Paris, 30 Avenue George V 75008, Paris,
France France
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Agfirst Farm Credit Bank, $20,000,000.00 1401 Hampton Street 1401 Hampton Street
Columbia South Carolina 29202 Columbia South Carolina 29202
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Barclays Bank, PLC $18,800,000.00 222 Broadway, 222 Broadway
New York, New York 10038 New York, New York 10038
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Banque Nationale de Paris, Chicago $14,585,475.58 209 S. LaSalle Street 209 S. LaSalle Street
Branch, Chicago, Illinois 60604 Chicago, Illinois 60604
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Christiania Bank OG Kreditkasse ASA, New $9,424,995.41 11 W 42nd Street, 7th Floor 11 W 42nd Street, 7th Floor New
York Branch New York, New York 10036 York, New York 10036
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Union Bank Of California, N.A $14,137,493.11 550 S. Hope Street 550 S. Hope Street
Los Angeles, California 90071 Los Angeles, California 90071
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Suntrust Bank Central Florida, N.A. $19,585,475.58 200 South Orange Avenue, Orlando, 200 South Orange Avenue,
Florida, 32801 Orlando, Florida 32801
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Bank Artesia Nederland N.V. $5,549,445.00 Herengracht 539-543 1000 AG Herengracht 539-543 1000 AG
Amsterdan Amsterdan
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
Artesia Bank Luxembourg $5,549,445.00 47 Boulevard Prince Henri 47 Boulevard Prince Henri
L 2010 Luxembourg L 2010 Luxembourg
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
US Bancorp Ag Credit $20,000,000.00 950 17th Street, Denver Colorado 950 17th Street, Denver, Colorado
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
TOTAL COMMITMENT $450,000,000.00
- ------------------------------------------- ------------------ ---------------------------------- ---------------------------------
</TABLE>
<PAGE> 7
EXHIBIT A
CONSENT
Dated as of July _, 1999
The undersigned, [NAME OF GUARANTOR], a company organized and existing
under the laws of , as Guarantor under the Guaranty dated as of May 19,
1998 (the "Guaranty") in favor of COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, hereby
consents to the foregoing amendment dated as of the date hereof and hereby
confirms and agrees that the Guaranty is, and shall continue to be, in full
force and effect and is hereby ratified and confirmed in all respects except
that, upon the effectiveness of, and on and after the date of, the said
amendment, all references in the Guaranty to the Credit Agreement referred to in
the said amendment, "thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean the Credit Agreement as amended by the said
amendment.
[NAME OF GUARANTOR]
By:______________________
Name:
Title:
A-1
<PAGE> 8
CONSENT
Dated as of August 2, 1999
The undersigned, as Guarantor under its respective Guaranty dated as of
May 19, 1998 (with respect to each such Guarnator, its "Guaranty") in favor of
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW
YORK BRANCH, hereby consents to the foregoing amendment dated as of the date
hereof and hereby confirms and agrees that the Guaranty is, and shall continue
to be, in full force and effect and is hereby ratified and confirmed in all
respects except that, upon the effectiveness of, and on and after the date of,
the said amendment, all references in the Guaranty to the Credit Agreement
referred to in the said amendment, "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean the Credit Agreement as
amended by the said amendment.
DEL MONTE FRESH PRODUCE (UK) LTD.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
WAFER LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE INTERNATIONAL INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE N.A., INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
A-2
<PAGE> 9
FRESH DEL MONTE PRODUCE INC.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
GLOBAL REEFER CARRIERS LTD.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
FRESH DEL MONTE PRODUCE, N.V.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE, B.V.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE, (ASIA PACIFIC)
LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
CLAVERTON LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE BVI LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
A-3
<PAGE> 10
COMPANIA DE DESARROLLO BANANERO DE
GUATAMALA, S.A
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
DEL MONTE FRESH PRODUCE COMPANY
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
FDM HOLDINGS LIMITED
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
CORPORACION DE DESARROLLO AGRICOLA DEL
MONTE, S.A.
By: /s/ JOHN. F. INSERRA
---------------------------------------
Title
-------------------------------------
A-4
<PAGE> 1
EXHIBIT 2.5
AN ASTERISK [*] DENOTES CONFIDENTIAL INFORMATION
ACQUISITION AGREEMENT (this "AGREEMENT"), dated as of December 23,
1998, among
[*******************************and********************************************
********************************and********************************************]
"Sellers").
WHEREAS, [******] own approximately [**]% and approximately [**]%,
[*******], of all of the outstanding shares of capital stock (the "TARGET
Shares") of Banana Marketing Belgium N.V., a company incorporated under the laws
of Belgium with its principal offices at [****************] (the "TARGET
Company");
WHEREAS, [*****] and [*******] have agreed to sell and Purchaser has
agreed to buy all of the TARGET Shares; and
WHEREAS, the respective Boards of Directors of Sellers have reviewed
and approved this Agreement and deem it advisable and in the best interests of
Sellers that Sellers sell the TARGET Shares to Purchaser pursuant to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and undertakings contained or referred to in
this Agreement, and subject to the satisfaction or waiver of the conditions of
this Agreement, Sellers and Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The following terms when used in this Agreement have
the meanings set forth below:
"AFFILIATE" means, as to any Person, any Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For the purposes of this definition, "control" (including, with
correlative meaning, the terms "controlling" and "controlled") means the
possession of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"ANNUAL FINANCIAL STATEMENTS" has the meaning set forth in Section 3.3.
"BANANA BOX" means a 40 lb. box of bananas or its metric equivalent of
18.14 kilograms.
"BANANA PURCHASE AGREEMENT" means the Banana Purchase Agreement in the
form attached hereto as Exhibit A.
<PAGE> 2
"BELGIAN GAAP" means the Belgian Accounting Rules and Regulations, the
accounting principles adopted by the TARGET Company and generally accepted
accounting principles in Belgium as in effect from time to time, which are
applicable to the circumstances as of the date of determination.
"BUSINESS DAY" means any day other than a day on which banks are
permitted or required by law to be closed in the City of New York or the Cayman
Islands.
"CLAIM NOTICE" has the meaning set forth in Section 7.3(a).
"CLOSING" has the meaning set forth in Section 2.3.
"CLOSING DATE" has the meaning set forth in Section 2.3.
"COLLECTIVE RULES" has the meaning set forth in Section 3.13.
"CONTEST" has the meaning set forth in Section 8.6.
"CONTRACT" means any contract, agreement, indenture, note, bond, loan,
instrument, lease, conditional sale contract, mortgage, license, franchise,
insurance policy, commitment or other agreement, whether written or oral.
"DAMAGES" has the meaning set forth in Section 7.1.
"DIRECT CLAIM" has the meaning set forth in Section 7.3(a).
"EMPLOYMENT AGREEMENTS" has the meaning set forth in Section 3.13.
"ENVIRONMENT" means the ambient air, surface water, drinking water,
groundwater, land surface, subsurface strata, river sediment, plant or animal
life, and other natural resources.
"ENVIRONMENTAL CLAIM" means any written notice of violation, Legal
Proceeding, Lien, demand or Order by any Governmental Body or any Person for
personal injury, property damage or damage to natural resources or the
Environment, or for fines, penalties, or restrictions resulting from or based
2
<PAGE> 3
upon: (i) the existence, or the continuation of the existence, of a Release of
or exposure to, any Hazardous Material, (ii) the environmental aspects of the
management, storage, treatment or disposal of Hazardous Materials, or (iii) the
violation, or alleged violation, of any Environmental Law or Environmental
Permit.
"ENVIRONMENTAL LAW" means any Law, as in effect prior to and as of the
Closing, relating to: (i) pollution of or damage to the Environment, (ii)
protection, cleanup, preservation, and reclamation of the Environment, (ill)
Release of Hazardous Materials, (iv) management, storage, treatment and disposal
of or exposure to Hazardous Materials and (v) the health and safety of workers
and other persons.
"ENVIRONMENTAL PERMIT" means any Permit, approval, authorization,
license variance, registration, or permission required under any applicable
Environmental Law.
"EU BANANA IMPORT LICENSE" means any import license issued pursuant to
Title II of Commission Regulation No. 2362/98 of 28 October, 1998.
"EXECUTIVE OFFICERS" means the Board of Directors of Sellers and the
TARGET Company and Sellers' and the TARGET Company's most senior executive,
operations, financial, and legal officers.
"FACILITIES" means the buildings, plants, improvements, structures and
fixtures, including heating, ventilation and air conditioning systems, roof;
foundation and floors, located at any Real Property; PROVIDED, HOWEVER, as to
the Leased Properties, Facilities shall include only such of the foregoing for
which the TARGET Company has maintenance or replacement responsibility under the
subject leasehold agreement.
"FINANCIAL STATEMENTS" means the Annual Financial Statements and the
Interim Financial Statement (as defined in Section 3.3(a)).
"GOVERNMENTAL BODY" means any government or governmental or regulatory
body thereof, or political subdivision thereof; whether supranational, federal,
state, local or foreign, or any agency or instrumentality thereof, or any court
or arbitrator (public or private).
"HAZARDOUS MATERIAL" means any substance, material or waste, or any
constituent thereof, which is regulated by or forms the basis of liability under
any Environmental Law in any jurisdiction in which the TARGET Company conducts
business, or any material or substance which is defined as a "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous waste" or
"restricted hazardous waste," "subject waste," "contaminants," "toxic waste" or
"toxic substance" or any analogous terms under any such Environmental Law,
including petroleum products, asbestos and polychlorinated biphenyls.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7.3.
"INDEMNIFYING PARTY" has the meaning set forth in Section 7.3.
"INTELLECTUAL PROPERTY" means all trade or service marks or names,
including all trade or service mark registrations (and any applications
therefor), copyrights, copyright registrations, copyright applications,
maskworks and any applications therefor, designs and any applications therefor,
technology knowhow, computer software programs or applications (in both code and
source forms), Internet domains, customer lists, trade secrets and tangible or
3
<PAGE> 4
intangible proprietary information or material, and patent rights, including
issued patents, applications, divisions, continuations and
continuations-in-part, reissues and patents of additions.
"INTERIM FINANCIAL STATEMENT" has the meaning set forth in Section 3.3.
"JUDGMENT" means any and all judgments, orders, directives, rulings,
decisions, writs, injunctions (temporary, preliminary or permanent) decrees or
awards of any Governmental Body and any arbitration award.
"KNOWLEDGE OF" or "KNOWN TO" means, with respect to matters relating to
either Sellers or the TARGET Company, the knowledge of or known to the Executive
Officers of Sellers and/or the TARGET Company exercising reasonable care in the
exercise of their duties.
"LAW" means any applicable federal, state, local or foreign law
(including common law), statute, code, ordinance, rule or regulation.
"LEGAL PROCEEDING" means any judicial, administrative or arbitral
action, suit, proceeding, claim or governmental proceeding.
"LICENSE REGULATION" means Commission Regulation (EC) No. 2362/98 dated
October 28, 1998.
"LIEN" means any lien, pledge, mortgage, deed of trust, security
interest, claim. charge, easement or other real estate declaration, covenant,
condition, restriction, servitude or encumbrance whatsoever.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, prospects (for the calendar year 1999), assets, results of operations,
or financial condition of the TARGET Company.
"MATERIAL CONTRACT" means, with respect to the TARGET Company, except
as otherwise provided:
(i) any Contract which, in any case, involves future payments
(including reasonably anticipated potential payments) thereunder of [******]or
more in the aggregate (or its equivalent in any currency); and
(ii) any Contract which:
(A) is with any labor union or association representing employees;
(B) limits or affects the freedom of the TARGET Company to engage in
any line of business in any geographic area;
4
<PAGE> 5
(C) relates to the borrowing of money exceeding [*******]or the
guaranteeing of any such borrowing;
(D) is a material partnership, joint venture, shareholders' or other
similar contract with any Person;
(E) other than this Agreement (A) limits or contains restrictions on
the ability of the TARGET Company to: (1) declare or pay dividends on, to make
any other distribution in respect of or to issue or purchase, redeem or
otherwise acquire the capital stock of the TARGET Company, (2) incur
indebtedness, (3) incur or suffer to exist any lien, (4) purchase or sell any
assets and properties, to change the lines of business in which it participates
or engages, or (5) engage in any merger or other business combination or (B)
requires the TARGET Company to maintain specified financial ratios or levels of
net worth or other indicia of financial condition;
(F) is with any of the stockholders of Sellers or any Subsidiary or
Affiliate thereof;
(G) is to acquire or dispose of all or part of the equity securities of
any business and any buy/sell or other Contract relating to the purchase or sale
of capital stock of the TARGET Company or its Subsidiaries;
(H) is a material license (whether as licensor or licensee) or similar
agreement permitting the use of any Intellectual Property rights;
(I) is for the importation, transportation, customs clearance,
warehouse and distribution of fresh fruit or vegetables; or
(J) is a broker or finder's agreement.
"ORGANIZATIONAL DOCUMENTS" means all documents relating to the
formation, establishment and capital stock of a Person.
"PARENT" means, with respect to any Person, such Person's corporate
stockholder and any corporation that directly or indirectly controls such
corporate stockholder.
"PERMIT" means an approval, authorization, consent, franchise, license,
registration, waiver, variance, permit or certificate by or from any
Governmental Body.
"PERMITTED EXCEPTIONS" means (i) any Lien for current taxes not yet due
or payable or the validity of which is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established in
the Financial Statements if required by Belgian GAAP, (ii) any statutory
mechanics', carriers', workmen's, repairmen's, materialmen's, warehousemen's,
and any other similar Liens imposed by Law arising or incurred in the ordinary
course of business, (iii) such other Liens and defects in title which, together
with all other Permitted Exceptions, would not in the aggregate have a Material
5
<PAGE> 6
Adverse Effect on the TARGET Company, (iv) easements, rights of way and any
other encumbrances on any material real property that do not materially and
adversely affect the use of such property for its present purposes, (v) pledges
or deposits to secure public or statutory obligations or other similar
obligations not incurred in connection with the borrowing of money, the
obtaining of advances, or the deferred purchase price of property, (vi)
attachment, judgment and other similar Liens arising in connection with court
proceedings, provided that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are currently being contested
in good faith by appropriate proceedings and for which adequate reserves have
been established in the Financial Statements if required by Belgian GAAP, (vii)
Liens expressly disclosed or expressly reflected in the Financial Statements,
(viii) the interests of lessors in any property leased by the TARGET Company and
(ix) Liens reflected on SCHEDULE 1.1.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or other
legal entity or any government or any agency or political subdivision thereof.
"PURCHASE PRICE" has the meaning set forth in Section 2.2(a).
"REAL PROPERTY" has the meaning set forth in Section 3.6(b).
"REFERENCE QUANTITY" and "PROVISIONAL REFERENCE QUANTITY" have the
meanings set forth in the License Regulation.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, application, disposal, discharge, dispersal, leaching, or
migration into the Environment, including the movement of any Hazardous Material
through or in the Environment.
"SUBSIDIARY" or "SUBSIDIARIES" of a specified Person means a
corporation, partnership, joint venture or other legal entity controlled by such
Person directly or indirectly through one or more intermediaries. The term
"controlled by" means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting shares, by contract, or otherwise.
"TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, vehicles,
vessels, furniture, supplies, tools or other tangible personal property.
"TARGET COMPANY" has the meaning set forth in the recitals.
"TARGET SHARES" has the meaning set forth in the recitals. They are
described in Schedule 3.1(d).
"TAX" or "TAXES" means all federal, state, local or foreign income,
gross receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, employment, withholding, transfer, payroll, social
6
<PAGE> 7
security, goods and services, value-added or minimum tax, or any other tax,
custom. duty, governmental fee, or other like assessment or charge of any kind
whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Body.
"TAX CLAIM" has the meaning set forth in Section 8.4.
"TAX INDEMNITEE" has the meaning set forth in Section 8.1.
"TAX RETURN" means any return, report or similar statement required to
be filed with respect to any Taxes (including any attached schedules), including
any information return, claim or refund, amended return and declaration of
estimated Tax.
ARTICLE II
PURCHASE AND SALE OF THE TARGET SHARES
2.1 PURCHASE AND SALE OF THE TARGET SHARES. Upon the terms and subject
to the conditions set forth in this Agreement, at the Closing Sellers shall sell
to Purchaser, and Purchaser shall purchase from Sellers, the TARGET Shares, free
and clear of all Liens.
2.2 CONSIDERATION FOR THE TARGET SHARES.
(a) The aggregate consideration to be paid for the TARGET Shares shall
be US$58,703,920
[**************************************************************] (such
consideration, as modified pursuant to the terms of this Section 2.2, the
"Purchase Price").
(b) The Purchase Price shall be paid in the manner and at the times set
forth in Section 2.3 below; provided, however, that to the extent any
indebtedness of the TARGET Company (including, without limitation, accounts
payable to
[**********************************************************************]or any
indebtedness secured by the assets or the capital stock of the TARGET Company is
outstanding on the Closing Date (as defined in 2.3), Purchaser, in its sole
discretion, may elect to pay directly to any party to whom such indebtedness is
owed (a "Lender") such portion of the Purchase Price as is required to satisfy
such indebtedness and may take, or cause the TARGET Company to take, any actions
necessary to obtain delivery of any pledged TARGET Shares and a general release
by the Lender (in a form acceptable to Purchaser) in favor of the TARGET
Company. Such indebtedness shall include, but not be limited to:
(i) [*********] (or whatever amount is necessary to obtain the
general release referred to above and the release of the corresponding pledged
TARGET Company Shares) [*******************] pursuant to that Certain Loan and
Share Pledge
7
<PAGE> 8
Agreement,*********************************************************************;
(ii) [*********] (or whatever amount is necessary to obtain
the general release referred to above and the release of the corresponding
pledged TARGET Company Shares) owed to [*****************] pursuant to that
Certain Loan Agreement,
[**************************************] TARGET Company, as Borrower, and
Banacol and related
[******************************************************************************]
(iii) [***********](or whatever amount is necessary to obtain
the general release referred to above) owed to [******************] pursuant to
that certain
[******************************************************************************]
and the TARGET Company; and
(iv) [**********] payable to [***********] pursuant to that
certain Settlement Agreement,
[*****************************************************************************]
and the TARGET Company.
In the event that Sellers arrange to satisfy any of the indebtedness described
in clauses (i)-(iv) above for an amount (the "Settlement Amount") less than that
specified in such clauses and Purchaser elects to pay a portion of the Purchase
Price directly to the party to which such indebtedness is owed, Purchaser shall
pay the Settlement Amount to such party and the savings obtained through such
arrangements shall be for the account and benefit of Sellers.
(c) Sellers agree that the following amounts shall be deducted from the
Purchase Price and held by Purchaser until such time as Sellers satisfy the
conditions described below in this paragraph:
(i) [**************************]. The amount of [************] to
be held by Purchaser until such time as Sellers deliver to Purchaser an executed
general release, in a form acceptable to Purchaser, from
[***********************] in favor of the TARGET Company, its Parents,
Subsidiaries, and Affiliates and each of their respective officers, directors,
employees, agents and representatives, which shall include a release of any and
all claims that [******************] is entitled to utilize, claim, or receive
an assignment of any
[******************************************************************] to the
TARGET Company for the 1999 calendar year.
[****************************************************************************].
8
<PAGE> 9
(ii) [**************************]. The amount of [*********]
to be held by Purchaser until such time (whichever occurs first) as (I) Sellers
deliver to Purchaser an executed general release, in a form acceptable to
Purchaser, from [******] in favor of the TARGET Company, its Parents,
Subsidiaries, and Affiliates, and each of their respective officers, directors,
employees, agents and representatives of any any and all claims arising out of
or related to any claims for reimbursement or indemnification, duties, taxes, or
[**************************************************************************]
[******************************************************************************
********].
(iii) ACCOUNTS PAYABLE. [************************], to be held
by Purchaser until such time as Sellers deliver to Purchaser executed general
releases, in a form acceptable to Purchaser, from
[***************************************************] [****]TARGET Company, its
Parents, Subsidiaries, and Affiliates and a written acknowledgment of payment in
full from [**********************]. At Sellers' request, Purchaser shall pay the
applicable amounts directly to the above-named parties against receipt of such
general releases.
(d) All amounts (or the appropriate portions thereof) as to which
Purchaser makes the election provided for in Section 2.2(b) above or which are
held back by Purchaser pursuant to Section 2.2(c)
above,[*************************************************************] pursuant
to Section 2.2(c)(ii) above, shall be paid by Purchaser to the relevant Lender
or other party at or as promptly as practicable after Closing or Sellers'
request, as applicable, and any excess shall be promptly remitted to Sellers.
Any shortfall in the amounts held back pursuant to Section 2.2(c) may be offset
against any amounts due to Sellers or one of the Parents, Subsidiaries, or
Affiliates under the
[***********************************************************] (as defined in
Section 7.3(e) below).
2.3 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on such date and at such place as
Purchaser and Sellers agree as promptly as practicable following satisfaction or
waiver of the conditions set forth in Article VI, and in any event not later
than January 8, 1999. The date on which the Closing occurs is hereinafter
referred to as the "CLOSING DATE." At the Closing: (a) Sellers shall deliver to
Purchaser: (i) stock transfer powers in a form acceptable to Purchaser duly
executed on behalf of Sellers enabling Purchaser to register the transfer of the
TARGET Shares in the register of the TARGET Company and sufficient to convey to
Purchaser good title to the TARGET Shares and shall take or cause to be taken,
at its expense, any and all other actions necessary to effect the transfer of
9
<PAGE> 10
the TARGET Shares, and (ii) a duly executed [************************] in the
form attached hereto, and (b) Purchaser shall deliver to Sellers the Purchase
Price as reduced in accordance with Section 2.2 above by wire transfer of
immediately available funds. Regardless of when the Closing
occurs,[*********************************************************************].
2.4 POST CLOSING PURCHASE PRICE ADJUSTMENTS.
(a) In the event the TARGET Company is
[******************************************************************************]
consideration otherwise payable pursuant to Section 2.2 above shall be
[******************************************************************************]
In the event the TARGET Company obtains a 1999 Award that enables it to request
[******************************************************************************]
therewith, the consideration otherwise payable pursuant to Section 2.2
[******************************************************************************]
Purchase Price may be offset against, and deducted from, any amount due to
Sellers or one of their Parents, Subsidiaries, or Affiliates under the Banana
Purchase Agreement in accordance with the Offset Rules (as defined in Section
7.3(e) below).
(b) As soon as practicable but in no event more than 30 days after the
Closing, Seller will cause to be prepared a balance sheet and statement of
income for the TARGET Company as of December 31, 1998 and for the period
beginning January 1, 1998 and ending on December 31, 1998 (the "Preliminary
Closing Date Financial Statements") and deliver such Financial Statements to
Purchaser. The Preliminary Closing Date Financial Statements shall be prepared
in accordance with [***********] applied on a basis consistent with those used
in the preparation of the Annual Financial Statements.
(c) Purchaser shall, at its expense, cause [***********] ("Purchaser's
Accountants") to review the Preliminary Closing Date Financial Statements and to
deliver to Purchaser and Sellers, as soon as practicable, but in no event more
10
<PAGE> 11
than 30 days following Purchaser's receipt of the Preliminary Closing Date
Financial Statements, Purchaser's Accountants' draft review report thereon
(together with the Preliminary Closing Date Financial Statements).
(d) As soon as practicable but in no event more than 30 days after
receipt of the Preliminary Closing Date Financial Statements and the draft
report of Purchaser's Accountants, Sellers shall notify Purchaser whether they
accept or dispute the accuracy of the Preliminary Closing Date Financial
Statements and/or the terms of Purchaser's Accountants' draft report. If Sellers
have not given any such notice to Purchaser within the time period set forth in
the preceding sentence, Sellers shall be deemed to have accepted the accuracy of
the Preliminary Closing Date Financial Statements and the terms of Purchaser's
Accountants' draft report. If Sellers accept the Preliminary Closing Date
Financial Statements and the terms of such draft report, Purchaser's Accountants
shall be requested to issue their final review letter thereon and the
Preliminary Closing Date Financial Statements shall be deemed to be the final
financial statements of the TARGET Company as of and for the period ended on the
Closing Date for purposes of this Article 2 (the "Closing Date Financial
Statements"). If Sellers dispute the accuracy of any of such items, they shall
in the notice of such dispute set forth in reasonable detail those items that
they believe are not fairly presented or calculated and the reasons for their
opinion. The parties shall then meet and in good faith use their best efforts to
try to resolve their disagreements over the disputed items. If the parties
resolve their disagreements in accordance with the foregoing sentence, the
Preliminary Closing Date Financial Statements with those modifications, if any,
to which the parties shall have agreed shall be deemed to be the Closing Date
Financial Statements and Purchaser's Accountants shall be requested to issue
their final report thereon in accordance with the parties' agreement. If the
parties have not resolved their disagreements over the disputed items within 30
days after Seller's notice of dispute, the parties shall forthwith jointly
submit those disputed items to an accountant (the "Accounting Referee") mutually
acceptable to the parties who is a partner of the Brussels office of one of the
"big five" international accounting firms which does not regularly do business
with any of the parties (and in the event the parties cannot agree on the
identity of such partner, the Accounting Referee
[******************************************************************************]
shall make a binding determination of those disputed items in accordance with
this Agreement. The Preliminary Closing Date Financial Statements, with those
modifications determined by the Accounting Referee to be appropriate, shall be
deemed to be the Closing Date Financial Statements. The determination of the
Accounting Referee shall not, in the absence of manifest error, be subject to
contest. The fees and expenses of Purchaser's Accountants shall be paid by
Purchaser, the fees and expenses of Sellers' Accountants shall be paid by the
Sellers, and the fees and expenses of the Accounting Referee shall be equally
shared by Sellers on the one hand and the Purchaser on the other hand.
(e) Within 3 days after the final determination of the Closing Date
Financial Statements in accordance with Section 2.4(d), if as of the Closing
Date the Closing Date Financial Statements indicate any recorded or unrecorded
11
<PAGE> 12
liabilities, Sellers shall pay to Purchaser by wire transfer in immediately
available U.S. dollar funds an amount equal to the total amount of such
liability, or, at Purchaser's option, Purchaser may offset such amount against,
and deduct it from, any amount due to Sellers or one of their
[******************************************************************************]
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Sellers, jointly and severally, represent and warrant to Purchaser
that:
3.1 ORGANIZATION, AUTHORITY, AND ENFORCEABILITY.
(a) Each of Sellers and the TARGET Company is a company duly
incorporated and validly existing and, where applicable, in good standing under
the laws of its jurisdiction of incorporation. Each of Sellers have the
corporate power and authority to enter into this Agreement and to carry out
their respective obligations hereunder. The execution and delivery of this
Agreement and the completion of the transactions contemplated by this Agreement
have been duly authorized by the Board of Directors of each of Sellers, and no
other corporate approval on the part of any of the Sellers or the TARGET Company
is necessary to authorize the execution or delivery of this Agreement or the
transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by each of Sellers and, assuming due authorization,
execution and delivery by Purchaser, constitutes a legal, valid and binding
obligation of each of Sellers, enforceable against each of Sellers in accordance
with its terms.
(b) The TARGET Company has full corporate power and authority to own or
lease and operate its properties and to conduct its business as currently
conducted and is duly licensed or qualified and in good standing in all
jurisdictions in which the character of the properties owned or leased by it or
the nature of its business requires it to be so licensed or qualified.
(c) True and complete copies of the Organizational Documents of each of
Sellers and the TARGET Company have been made available to Purchaser or its
representatives. The minute books of each of Sellers and the TARGET Company have
been made available to Purchaser or its representatives and such minute books
contain complete and accurate records of all material meetings and accurately
reflect all material corporate actions of the shareholders and the Board of
Directors (including committees thereof) of the TARGET Company.
(d) SCHEDULE 3.1(d) lists all the authorized, issued and outstanding
shares of the capital stock of the TARGET Company (I.E., the TARGET Shares) and
the names of the holders of record of such shares. All of such outstanding
shares have been duly authorized and validly issued and are fully paid and
non-assessable.
12
<PAGE> 13
3.2 TITLE TO SHARES.
(a) The TARGET Shares delivered to Purchaser will constitute
one-hundred percent (100%) of the issued and outstanding share capital of the
TARGET Company on the Closing Date. Except as set forth in SCHEDULE 3.2(A), all
such TARGET Shares are owned of record by Sellers and are free and clear of any
Lien. Sellers will transfer and deliver, or caused to be delivered to Purchaser
at the Closing valid title to the TARGET Shares free and clear of any Lien
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock); provided, however, that Purchaser shall provide its
reasonable cooperation to Sellers in establishing and implementing a workable
payment vs. delivery mechanism to secure the release of any pledged TARGET
Shares on or before the Closing Date.
(b) There are not authorized or outstanding any subscriptions, options,
conversion rights, warrants or other agreements, securities or commitments of
any nature whatsoever (whether oral or written and whether firm or conditional)
obligating Sellers or the TARGET Company to issue, deliver, sell or acquire or
cause to be issued, delivered, sold or acquired, any shares of the capital stock
of the TARGET Company, or any securities convertible into or exchangeable for
shares of capital stock of the TARGET Company, or obligating Sellers or the
TARGET Company to grant, extend or enter into any such agreement or commitment.
3.3 FINANCIAL STATEMENTS.
(a) Attached as EXHIBIT 3.3(a)(i) are audited Annual Financial
Statements (and the appendix thereto) for the TARGET Company as of and for the
years ended December 31, 1996 and 1997 (such financial statements and the notes
thereto, the "ANNUAL FINANCIAL STATEMENTS"). Attached as EXHIBIT 3.3(a)(ii) is
the unaudited Interim Financial Statement (and the appendix thereto) for the
TARGET Company as of and for the ten-month period ended October 31, 1998, which
have been reviewed by [***********] (such financials statements and the appendix
thereto, the "INTERIM FINANCIAL STATEMENT"). The Annual Financial Statements and
the Interim Financial Statement (i) have been prepared in accordance with
[**********], consistently applied from period to period (except as disclosed
therein), (ii) fairly present, in all material respects, the financial position
of the TARGET Company as of the date indicated therein and the results of
operations for the periods then ended and (iii) are consistent in all material
respects with the books and records of the TARGET Company. The Interim Financial
Statement has been prepared on the same basis as the Annual Financial Statements
and contains all adjustments, consisting only of normal and recurring
adjustments, necessary for a fair presentation of the results for such period
and financial condition as of such date.
(b) Except as set forth on SCHEDULE 3.3(b), since October 31, 1998,
TARGET Company has not:
(i) suffered any event or condition or incurred any liability
which had or may have a Material Adverse Effect on the TARGET Company;
13
<PAGE> 14
(ii) declared, set aside or paid any dividend or other
distribution with respect to any shares of capital stock of the TARGET Company,
or repurchased, redeemed or otherwise acquired any outstanding shares of capital
stock or other securities of the TARGET Company;
(iii) incurred (whether by borrowing, guaranteeing or
contracting to borrow or guarantee) any indebtedness or varied the material
terms of any existing debt instruments;
(iv) sold or otherwise disposed of any material assets or
properties;
(v) mortgaged, pledged or created any Lien on any material
assets;
(vi) entered into any capital or operating lease;
(vii) entered into any interest rate, currency or other swap,
hedging or derivative transaction; or
(viii) agreed or committed to do the foregoing.
3.4 NO CONSENT, BREACH OR DEFAULT. Except (a) as set forth on SCHEDULE
3.4, or (b) as required under any applicable antitrust laws or merger
regulations, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement do not and will
not (i) conflict with or violate any provision of the Organizational Documents
of Sellers or the TARGET Company, (ii) require a consent or other action by any
Person or violate, conflict with or result in the breach or termination of; or
otherwise give any other Person the right to accelerate, cancel, terminate or
receive any payment, or constitute a default, event of default or an event which
with notice, lapse of time, or both, would constitute a default or event of
default, under the terms of any Permit or Contract (including, without
limitation, any employment agreement or employee benefit plan) to which Sellers
or the TARGET Company is a party or by which their respective assets are bound,
(iii) result in the creation of any Liens, other than Permitted Exceptions, upon
any of their respective assets or (iv) constitute a violation by the Sellers or
the TARGET Company of any Law or Judgment.
3.5 NO LIABILITIES. Except as set forth in the Annual Financial
Statements for the period ended December 31, 1997 or in the Interim Financial
Statement or as described in Section 2.2(c) above, (a) there are no liabilities
of the TARGET Company of a kind or type that pursuant to Belgian GAAP would be
required to be disclosed in the Annual Financial Statements for the period ended
December 31, 1997 or the notes thereto and (b) there are no other liabilities of
the TARGET Company with a risk of loss, individually or in the aggregate,
[*******************] whether accrued or contingent and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in such a liability. At Closing, any liabilities that remain or have
been reserved for but not paid shall be eliminated by Sellers or provided for by
an adjustment to the Purchase Price.
14
<PAGE> 15
3.6 REAL AND PERSONAL PROPERTY.
(a) The TARGET Company does not own any real property,
(b) SCHEDULE 3.6(b) lists all real property and Facilities thereon
leased by the TARGET Company involving annual lease payments in excess of
[********] (the "REAL PROPERTY") together with a brief description of such real
property and any Facilities located thereon. Except as noted on SCHEDULE 3.6(b),
(i) the TARGET Company is in possession and has the quiet enjoyment of the space
and/or estate under each lease pursuant to which it is a tenant on each Real
Property and there is no material default by any such entity under any such
lease; and (ii) (A) neither Sellers nor the TARGET Company have received any
notice that such Real Property is subject to any pending condemnation or similar
"taking" proceeding by any Governmental Body with respect to such Real Property
and (B) neither Sellers nor the TARGET Company have received any notice, with
respect to any Facilities located thereon, of any violation of any applicable
zoning law or regulation (without being a legal nonconforming use or pursuant to
zoning variances).
(c) SCHEDULE 3.6(c) lists all items of Tangible Personal Property (i)
with a gross book value in excess of [********] that are owned by the TARGET
Company and (ii) each item of leased Tangible Personal Property involving annual
lease payments in excess of [********] that is leased by the TARGET Company.
With respect to such Tangible Personal Property, the TARGET Company owns and has
good and valid title to, or has a valid leasehold interest in, such Tangible
Personal Property (except for personal property disposed of in the ordinary
course of business).
3.7 INTELLECTUAL PROPERTY.
(a) No Intellectual Property owned in whole or in part or used by the
TARGET Company is being acquired by Purchaser and to the extent that there are
any Intellectual Property rights that are owned by and/or in the name of the
TARGET Company, Sellers agree to cause such Intellectual Property rights to be
transferred by the TARGET Company prior to the Closing Date. Any and all costs,
expenses, taxes, and attorneys fees incurred by Sellers or the TARGET Company in
connection with such transfer shall be the sole responsibility of Sellers.
3.8 MATERIAL CONTRACTS. SCHEDULE 3.8 lists all the Material Contracts
of the TARGET Company. Except as noted on SCHEDULE 3.8, each such Material
Contract is valid and binding on the TARGET Company, and to Sellers and the
TARGET Company's Knowledge, no party to any such Material Contract is in default
in any material respect thereunder or has given written notice of its intention
to terminate any such Material Contract.
15
<PAGE> 16
3.9 LEGAL COMPLIANCE.
(a) Except as noted on SCHEDULE 3.9(a), (i) the TARGET Company is in
compliance, in all material respects, with all Laws and Judgments promulgated or
rendered by any Governmental Body (in each case other than as they relate to
Environmental Laws, the subject of which is addressed in Section 3.12)
applicable to it or to the operation of its business or the ownership or use of
its properties and (ii) neither Sellers nor the TARGET Company have received
from (or have Knowledge of the issuance by) any Governmental Body of any notice
of material violation or alleged violation of any such Law or Judgment.
(b) Except as noted on SCHEDULE 3.9(b), (i) the TARGET Company owns or
possesses all Permits (other than Environmental Permits, the subject of which is
addressed in Section 3.12) required by the nature of the operations of the
TARGET Company to permit the operation thereof in the manner in which they are
currently conducted, except where the failure to obtain such Permit will not
have a Material Adverse Effect, (ii) each such Permit has been validly issued in
compliance with all applicable Laws, rules or regulations, and the TARGET
Company has complied with all material conditions required for the issuance of
each Permit applicable to it, (iii) no default or violation, or event that, with
the lapse of time or giving of notice or both, would become a default or
violation, has occurred in the due observance of the terms of any such Permit,
except where the default or violation will not result in a Material Adverse
Effect, (iv) each such Permit is in full force and effect and (V) neither
Sellers nor the TARGET Company have received any notice from any Government Body
to the effect that there is lacking any such Permit required in connection with
the current operation of its business.
3.10 LITIGATION.
(a) Except as described in Section 2.2(c) above, there is no (whether
or not covered by insurance) (i) Judgment which has not been discharged, (ii)
Legal Proceeding pending or, to Sellers or the TARGET Company's Knowledge,
threatened, or (iii) written claim against the TARGET Company.
(b) No Legal Proceeding is pending or, to Sellers' and the TARGET
Company's Knowledge, threatened against Sellers or the TARGET Company before any
Governmental Body to restrain or prohibit, or to obtain damages, a discovery
order or other relief in connection with the transactions contemplated by this
Agreement.
(c) In connection with the [***************] matter described in
Section 2.2(c)(i), [******] has no valid legal claim against the TARGET Company.
16
<PAGE> 17
3.11 TAXES AND TAX RETURNS.
(a) The TARGET Company has timely filed (taking into account all
available extensions) all Tax Returns concerning Taxes (or such Tax Returns have
been filed on behalf of the TARGET Company) required to be filed by applicable
Law and has paid all amounts due in respect of Taxes (whether or not actually
shown on such Tax Returns); and all such Tax Returns are true, correct and
complete in all material respects and accurately set forth all items to the
extent required to be reflected or included in such Tax Returns by applicable
federal, state, local or foreign tax Laws.
(b) As of the date hereof, neither Sellers nor the TARGET Company have
executed any outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any material Taxes or
Tax Returns and the period during which any assessment against the TARGET
Company may be made by any Governmental Body has expired without waiver or
extension of any such period.
(c) No written notice has ever been given by any Governmental Body in a
jurisdiction where the TARGET Company does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction.
(d) As of the date hereof, there are no Liens with respect to any Taxes
upon any of the assets or properties of the TARGET Company.
(e) The TARGET Company has paid in full all Taxes for the periods
covered by such Tax Returns, as well as all other Taxes, penalties, interest,
fines, deficiencies, assessments and governmental charges that have become due
or payable (including, without limitation, all Taxes that the TARGET Company is
obligated to withhold from amounts paid or payable to or benefits conferred upon
employees, creditors and third parties); and as of the date hereof; there has
been no written notice of any proposed liability for any material Tax to be
imposed upon the TARGET Company for the year ended December 31, 1998 or for any
prior year.
(f) No agreements relating to the allocation or sharing of Taxes exist
to which the TARGET Company is a party.
(g) There have been no Tax Returns filed by the TARGET Company pursuant
to the Laws of any Governmental Body that have been investigated or audited by
the appropriate Governmental Body during the preceding three years, there have
been no adjustments resulting from each such examination or audit and no such
investigation, examination or audit is in progress. In addition, there are no
deficiencies proposed as a result of such examinations or audits have been paid
or finally settled and no issue has been raised in any such examination or audit
that, by application of similar principles, reasonably can be expected to result
in the assertion of a deficiency for any other year not so examined or audited.
Except for Taxes payable with Tax Returns not yet due and filed, there are no
grounds for any further tax liability with respect to the years that have not
been examined or audited.
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(h) On or after January 1, 1993, the TARGET Company has not executed
any formal settlement agreement with a Governmental Body regarding its liability
in respect of Taxes.
(i) The TARGET Company has not agreed to nor is it required to make any
adjustments on any Tax Returns pursuant to a provision of Law by reason of a
change in accounting method initiated by it or any other relevant party; and
neither Sellers nor the TARGET Company have any knowledge that any Governmental
Body has proposed any such adjustment or change in accounting method. Further,
neither Sellers nor the TARGET Company have any application pending with any
Governmental Body requesting permission for any changes in accounting methods
that relate to the business or assets of the TARGET Company.
3.12 ENVIRONMENTAL MATTERS.
(a) The TARGET Company has operated in compliance with all applicable
Environmental Laws, the violation of which would have a Material Adverse Effect
on the TARGET Company.
(b) The TARGET Company has obtained and currently maintains all
Environmental Permits necessary for the operation of its business, and (i) each
such Environmental Permit has been validly issued in compliance with all
applicable Environmental Laws, and the TARGET Company has complied with all
material conditions required for the issuance of each Environmental Permit
applicable to it, (ii) no default or violation, or event that, with the lapse of
time or giving of notice or both, would become a default or violation, has
occurred in the due observance of the terms of any such Environmental Permit,
(iii) each such Environmental Permit is in full force and effect, and (iv)
neither Sellers nor the TARGET Company have received any notice from any
Government Body or Person to the effect that there is lacking any such
Environmental Permit required in connection with the current operation of the
TARGET Company's business.
(c) The TARGET Company has not been subject to any Environmental
Claims, and, to the knowledge of Sellers and the TARGET Company, no
Environmental Claim has been threatened.
(d) No Release that has required or is reasonably anticipated to
require reporting to a Governmental Body, investigation, study, assessment,
testing, monitoring, containment, removal, remediation, response, cleanup, or
abatement pursuant to applicable Environmental Law has occurred at any time at,
in, on, under, affecting or migrating to or from the Real Property.
(e) No Hazardous Material has been disposed of by the TARGET Company on
or under any Real Property.
(f) None of the Real Properties is on any list of sites subject to
investigation or cleanup issued by a Governmental Body pursuant to applicable
Environmental Law.
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(g) To the TARGET Company's Knowledge, no asbestos-containing material,
polychlorinated biphenyls, or underground storage tanks are present on or under
any Real Property.
(h) Sellers and the TARGET Company have provided to Purchaser all
investigations, studies, audits, tests, sampling and monitoring data, asbestos
and other building surveys, analyses and reviews in their possession relating to
the Environment associated with the Real Property, including without limitation,
indoor and outdoor air quality, groundwater conditions, surface water liability
incurred under, or for a violation or failure to satisfy the requirements of;
any such Law, agreement or instrument.
3.13 EMPLOYMENT MATTERS.
(a) SCHEDULE 3.13 sets forth, with respect to the TARGET Company, all
of the collective rules applicable to its employees (the "COLLECTIVE RULES"),
including without limitation: (i) the applicable collective bargaining
agreements and company agreements, other than those applicable to a sector of
the industry generally; (ii) any exceptional agreements concluded with employee
representatives; (iii) the remuneration system, including premiums, bonuses,
commissions, advantages in kind; (iv) profit-sharing, incentive and company
savings schemes; (v) any retirement or health insurance plan pursuant to which
employees are entitled to receive advantages in addition to those provided for
by law or the applicable collective bargaining agreements; and (vi) any
regional, local or individual company or establishment practices which provide
for advantages which exceed those provided for by law or the applicable
collective bargaining agreements.
(b) SCHEDULE 3.13 sets forth all consulting, employment, severance,
termination or compensation Contracts of the TARGET Company (the "EMPLOYMENT
AGREEMENTS") and indicates, with respect to each such Person, its status, age,
seniority and compensation. None of the Employment Agreements provides for
payments in connection with any change in control of the TARGET Company and no
amount will become due to any employee, consultant or director of the TARGET
Company under the Collective Rules or any Employment Agreement solely as a
result of the transactions contemplated by this Agreement.
(c) The TARGET Company is now and has in the past been in compliance
with all provisions of applicable labor and social security laws, the Collective
Rules and the Employment Agreements and all payments due thereunder have been
made when due and all amounts properly accrued as liabilities which have not
been paid have been properly recorded on the books of the TARGET Company.
(d) Since January 1, 1993, there have not occurred any strikes, slow
downs, work stoppages or other similar labor actions by any group of employees
of the TARGET Company. No Proceeding arising out of any labor grievance under
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any Law, the Collective Rules or any Employment Contract is pending or, to the
best knowledge of the Seller, threatened.
(e) The TARGET Company has not made any commitment to any public
agency, labor organization, employees' representatives or any other party,
relating to the number of its employees or to future collective dismissals.
3.14 AFFILIATE TRANSACTIONS.
(a) Except as shown on SCHEDULE 3.14(a), (i) there are no existing
agreements, arrangements, understanding or indebtedness between the TARGET
Company, on the one hand, and Sellers or any officer, director, stockholder,
Subsidiary or Affiliate of Sellers, on the other hand, (ii) no such officer,
director, stockholder, Subsidiary, or Affiliate of Sellers provides or causes to
be provided any assets, services or facilities to the TARGET Company which are
individually or in the aggregate material to the business or condition of the
TARGET Company, (iii) neither Sellers nor the TARGET Company provide or cause to
be provided any assets, services or facilities to any officer, director,
stockholder, Subsidiary or Affiliate of Sellers which are individually or in the
aggregate material to the business or condition of the TARGET Company and (iv)
the TARGET Company does not own any capital stock, indebtedness or other
securities issued by any such officer, director, stockholder, Subsidiary or
Affiliate of Sellers.
(b) At the Closing, there will not be any agreements, arrangements,
understanding or indebtedness between the TARGET Company, on the one hand, and
Sellers or any officer, director, stockholder, Subsidiary or Affiliate of
Sellers on the other hand.
3.15 BROKERS. Neither Sellers nor the TARGET Company nor anyone acting
on their behalf has employed or retained any investment bank, broker or finder
or incurred any liability for any brokerage fees, commissions or finders fees or
other similar compensation in connection with the transactions contemplated by
this Agreement.
3.16 BANK ACCOUNTS. Schedule 3.16 lists truly and completely in all
material respects all the bank accounts the TARGET Company maintains and the
authorized signatories for each such account.
3.17 FOREIGN CORRUPT PRACTICES. None of the TARGET Company, or any
director, officer, agent, employee, Affiliate or other Persons associated with
or acting on behalf of the TARGET Company, has at any time (a) made any unlawful
contribution to a candidate for foreign office, or failed to disclose fully any
contribution in violation of law, (b) made any direct or indirect payment to any
foreign or domestic, federal or state governmental officer or official, or other
Person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
therein (c) used any corporate funds of the TARGET Company for any unlawful
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contribution, gift, entertainment or other unlawful payment on behalf of the
TARGET Company to any foreign or domestic government official or employee or (d)
directed or participated in any act in violation of, or any act that would be in
violation of, any provision of the United States Foreign Corrupt Practices Act
of 1977, as amended.
3.18 TITLE TO EU BANANA IMPORT LICENSES. Sellers have provided to
Purchaser a copy of all documents submitted to the competent authority to
register as "traditional operator" within the meaning of the License Regulation.
All information contained in such documents is true and correct.
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In addition, neither Sellers nor the TARGET Company are aware or have received
notice of any action by Sellers, TARGET Company, or any other party, that would
render the Reference Quantity or any or all of the licenses to be issued
pursuant thereto invalid or in violation of Council Regulation (EEC) No. 404/93,
the License Regulation, or any other applicable Regulations, Rules, or Orders
issued by the European Community or any of its Commissions, Committees, Councils
or other governmental bodies, including but not limited to the failure of Seller
or TARGET Company to pay any applicable tariffs.
3.19 ACCOUNTS RECEIVABLE. All accounts receivable of the TARGET Company
and other rights of payment, including without limitation, unbilled amounts and
credits extended to third parties, shown on the Interim Financial Statement or
recorded on its books by the TARGET Company before the Closing Date, shall be
retained and collected by the Sellers.
3.20 SUBSIDIES. There are no governmental, quasi-governmental, and
other public and private grants that provide any reimbursement, refund,
abatement, Tax reduction public or other benefit to the TARGET Company and for
which there are obligations that remain outstanding, whether in terms of use of
funds, continued operation, employment or otherwise.
3.21 DISCLOSURE. The representations and warranties of Sellers
contained in this Agreement, the Schedules hereto and in any certificate or
document delivered at Closing to Purchaser do not contain any untrue statement
of a material fact and do not omit or state a material fact necessary in order
to make the statements herein or therein, in light of the circumstances under
which they made, not misleading. Purchaser acknowledges that neither of Sellers
nor any other person has made any representation or warranty, expressed or
implied, as to the accuracy or completeness of any information regarding the
TARGET Company except as expressly set forth in this Agreement or the schedules
hereto, and except as otherwise expressly provided herein neither of Sellers nor
any other person will have or be subject to any liability or indemnification
obligation to Purchaser or any other person resulting from the transactions
contemplated by this Agreement.
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3.22 BANKRUPTCY. None of the TARGET Company Shares or the TARGET
Company's assets or liabilities are the subject of any bankruptcy or any similar
proceeding in Colombia or any other country, nor are they subject to that
certain ACUERDO CONCORDATORIO, dated July 31, 1995, among C.I. Banacol S.A. and
certain creditors (the "Acuerdo Concordatorio") or any similar agreement between
either of Sellers or any of their respective Parents, Subsidiaries, or
Affiliates. Neither the execution and delivery of this agreement by Sellers nor
the performance of the transactions contemplated by this Agreement will violate
any applicable Colombian bankruptcy law, any order of any Colombian bankruptcy
court, or the terms of the Acuerdo Concordatorio or any similar agreement with
the creditors of either of Sellers or any of their respective Parents,
Subsidiaries, or Affiliates.
ARTICLE LV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers that:
4.1 ORGANIZATION AND EXISTENCE. Purchaser is a company duly
incorporated, and validly existing under the laws of the Netherlands Antilles,
and has full corporate power and authority to conduct its business as it is now
being conducted and to own or lease the properties and assets it now owns or
holds under lease.
4.2 CAPACITY. Purchaser has full corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the legal, valid and binding agreement of Purchaser
and is enforceable against Purchaser in accordance with its terms and all
requisite corporate proceedings for the execution and delivery of this Agreement
and consummation of the transactions contemplated thereby have occurred.
4.3 NO CONFLICTS; CONSENTS. To the best of Purchaser's Knowledge, the
execution, delivery and performance of this Agreement and the documents,
instruments and the transactions contemplated by this Agreement do not and will
not contravene, constitute a default under, or require the approval or consent
of its shareholders or any other party under (i) the Articles of Association of
Purchaser, (ii) the terms of any judgment, order, decree or injunction
applicable to Purchaser or its properties or assets or (iii) any agreement to
which Purchaser is a party or by which Purchaser is bound. Execution, delivery
and performance by Purchaser of this Agreement will not require any action by or
in respect of; or consent or approval of; or filing with, any governmental body,
agency or official, except as required under applicable antitrust laws or merger
regulations.
4.4 FINANCING. Purchaser has sufficient cash, available lines of credit
or other sources of immediately available funds to enable it to pay the Purchase
Price in full at the Closing.
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<PAGE> 23
4.5 LITIGATION. There is no action, suit, investigation or proceeding
pending against Purchaser before any court, arbitrator or any governmental body,
agency or official which in any manner challenges or seeks to prevent, enjoin,
alter or delay this Agreement or the transactions contemplated by this
Agreement.
4.6 BROKERS. Purchaser has dealt with no investment bank, broker,
finder or similar person in connection with this Agreement or the transactions
contemplated by this Agreement.
ARTICLE V
COVENANTS OF SELLER AND PURCHASER
5.1 ORDINARY COURSE OF BUSINESS. During the period from the date of
this Agreement to the Closing Date, except as specifically contemplated by this
Agreement or as otherwise consented to in writing by Purchaser, Sellers will
cause the TARGET Company to:
(a) carry on its business in, and only in, the ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent with such business, use all reasonable efforts to preserve intact its
present business organization, keep available the services of its present
officers and employees and preserve its relationships with clients, suppliers,
customers, distributors and others having business dealings with it, maintain
all assets other than those disposed of in the ordinary course of business in
good repair and condition, maintain its books of account and records in the
usual, regular and ordinary manner, and preserve its good will and ongoing
business;
(b) promptly advise Purchaser in writing of any change in its condition
(financial or otherwise), properties, liabilities, operations or prospects which
is or may reasonably be expected to be materially adverse to it;
(c) not amend its charter or other organizational documents;
(d) not acquire, by merger, consolidation, purchase of shares, stock or
assets or otherwise, any corporation, partnership, association or other business
organization or division thereof;
(e) not alter its outstanding share capital or purchase or redeem any
shares of its capital stock,
(f) not issue or sell (or agree to issue or sell) any of its share
capital or any options, warrants or other rights to purchase any such shares or
any securities convertible into or exchangeable for such shares;
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<PAGE> 24
(g) not incur any indebtedness for borrowed money (including through
the issuance of debt securities) or vary the terms of any existing indebtedness
without Purchaser's prior written consent;
(h) not mortgage, pledge or subject to any Lien except for Permitted
Exceptions, any of its properties;
(i) not discharge or satisfy any material Lien or pay or satisfy any
material obligation or Liability (fixed or contingent) or compromise, settle or
otherwise adjust any material claim or litigation;
(j) not acquire or dispose of any assets other than cash in connection
with repayment of debt without the prior written consent of Purchaser;
(k) not make any change in its accounting procedures or practices;
(l) not grant to any officer, director, consultant or employee any
increase or modification of compensation or benefits (except as required by
law), or any severance or termination pay, or make any loan to or enter into any
employment agreement or arrangement with any such person,
(m) not adopt, enter into, amend in any material respect, announce any
intention to adopt or terminate, any Plan or other employee benefit plan,
program or arrangement;
(n) not make an investment, any capital expenditure or otherwise
acquire any asset (directly or indirectly) except for bananas and plantains
without Purchaser's prior written consent; and
(o) not agree to take any of the actions set forth in the foregoing
subparagraphs (c) through (n).
5.2 INSPECTIONS. During the period from the date of this Agreement to
the Closing Date, Sellers and the TARGET Company shall permit Purchaser and its
representatives full access to the books, records, facilities, properties,
assets and operations of the TARGET Company as Purchaser shall reasonably deem
necessary to verify matters set forth herein, as long as such access is
conducted in a manner that minimizes disruption of the TARGET Company's
business. Sellers shall arrange for Purchaser and its representatives to discuss
with appropriate officers, employees and representatives of Sellers and the
TARGET Company such matters related to the transactions provided for herein as
Purchaser may reasonably request.
5.3 REASONABLE EFFORTS. Purchaser and Sellers shall: (i) promptly make
all applicable filings and thereafter make any other submissions required under
all applicable laws with respect to the transactions contemplated by this
Agreement and (ii) use their respective reasonable efforts to promptly take, or
cause to be taken, all other actions and do, or cause to be done, all other
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<PAGE> 25
things necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the generality of
the preceding sentence, Purchaser shall, or shall cause the TARGET Company to,
promptly remit to Sellers any amounts received by the TARGET Company following
the Closing in respect of accounts receivable arising from operations of the
TARGET Company prior to the Closing Date.
5.4 PUBLICITY. Except as may be required by applicable law or any
listing agreement with a national securities exchange (or similar agreement) in
which case no consultaion or approval will be required, Purchaser, Sellers and
the TARGET Company agree that they will consult with each other concerning any
proposed press release or public announcement pertaining to the transactions
contemplated by this Agreement and will not issue any such press release or make
any such public statement without prior approval of the other parties hereto.
5.5 REPRESENTATIONS AND WARRANTIES. Neither Sellers nor Purchaser will,
or will allow any of their respective officers, directors, employees, agents or
Subsidiaries to take any action that would cause any of the representations and
warranties set forth herein not to be true and correct in all material respects
at and as of the Closing Date.
5.6 CONSENTS. Sellers and Purchaser shall cooperate in obtaining the
consents identified on SCHEDULE 3.4.
5.7 CERTAIN NOTIFICATIONS. At all times prior to the Closing Date, each
party shall promptly notify the other in writing of the occurrence of any event
which will or may result in the failure of any of the conditions contained in
Article VI to be satisfied.
5.8 TAX INFORMATION AFTER THE CLOSING. After the Closing, Purchaser on
one hand and Sellers on the other hand, will make available to the other, as
reasonably requested, all information, records or documents relating to the
liability for Taxes or potential liability of the TARGET Company for Taxes for
all periods prior to or including the Closing Date and will preserve such
information, records or documents until the later of (i) the expiration of any
applicable statute of limitations or extensions thereof or (ii) seven years from
the Closing Date.
5.9 CONFIDENTIALITY. Purchaser and its representatives shall maintain
confidential all information they receive during their due diligence (regardless
whether conducted prior to or after the execution of the Agreement and except as
may be required by applicable law or pursuant to an order of a Court of
competent jurisdiction), and will not use such information for any purpose other
than evaluating this transaction The obligation will remain in effect until the
later of the Closing or three years from the date of termination of this
Agreement. If this Agreement is terminated by Sellers or Purchaser, Purchaser
and its representatives will return any and all documents, notes, papers, or any
other document (or copies thereof) obtained by Purchaser or its representatives
from Sellers or its representatives with respect to this Agreement no later than
thirty (30) days after the termination of this Agreement.
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<PAGE> 26
5.10 TERMINATION OF EMPLOYEES. In cooperation with Purchaser, at or
prior to Closing, Sellers shall cause the TARGET Company to terminate all of its
employees and Sellers shall be solely responsible for the payment of any salary
or other benefits (including but not limited to severance) that may be due to
such employees by contract or pursuant to applicable Belgian law and shall
obtain a release of any claims that each employee may have against the TARGET
Company in a form acceptable to Purchaser.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The obligations
of Purchaser to purchase the TARGET Shares at the Closing are subject to the
satisfaction at or prior to the Closing Date of each of the following conditions
(unless satisfaction of any such condition is expressly waived in a writing
delivered to Sellers):
(a) No Proceeding by any Person shall be threatened or pending which
seeks to prohibit or declare illegal, or to obtain a material amount of damages
arising from the transactions contemplated by this Agreement.
(b) All governmental filings required to be made prior to the Closing
Date with, and all governmental consents required to be obtained prior to the
Closing Date from any Governmental Body in connection with the transactions
contemplated by this Agreement shall have been made or obtained, and any
required waiting period in connection therewith shall have elapsed.
(c) Purchaser and Sellers shall have received all requisite Consents,
approvals, waivers and agreements of third parties necessary to ensure that the
transactions contemplated in this Agreement shall not violate any provision of
any Contract or Judgment to which Sellers, the TARGET Company, or Purchaser is a
party or by which any of them or their property may be bound, or which gives
rise to any right to accelerate any material indebtedness of Sellers or
Purchaser.
(d) Purchaser shall have received the written opinions addressed to
Purchaser and dated as of the Closing Date from counsel to Sellers in the form
attached hereto as Schedule 6.1(d).
(e) Purchaser shall have received from Sellers certificates, signed by
an appropriate officer of Sellers, in the form attached hereto as Schedule
6.1(e).
(f) The representations and warranties of Sellers contained in Sections
3.1(a), 3.1(d), 3.2, and 3.18 above shall be accurate in all material respects
as of the Closing Date as though restated as of such date, and Sellers shall
have complied in all material respects with the covenants contained in Sections
5.1 and 5.10 above.
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(g) Sellers shall have delivered to Purchaser (or its designee(s)) (i)
duly completed and executed stock transfer powers for the transfer of the
ownership of all of the TARGET Shares to Purchaser (or its designee(s)),
together with the share register for the TARGET Company (ii) unconditional
resignation letters, effective on the Closing Date, from all of the directors,
officers, and the statutory auditor of the TARGET Company, (iii) a duly executed
Banana Purchase Agreement, in a form substantially similar to the form attached
hereto as Exhibit "A."
(h) As of the Closing Date, except as set forth on SCHEDULE 6.1(h),
there shall be no debt obligations outstanding between the Sellers and their
respective Parents, Affiliates, or Subsidiaries, on the one hand, and the TARGET
Company, on the other hand.
(i) Notwithstanding anything else to the contrary herein, Sellers shall
have delivered to Purchaser an executed general release,
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6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS. The obligations of
Sellers to sell the TARGET Shares at the Closing are subject to the satisfaction
at or prior to the Closing Date of each of the following conditions (unless
satisfaction of any such condition is expressly waived in a writing delivered to
Purchaser):
(a) No Proceeding by any Person shall be pending which seeks to
prohibit or declare illegal the transactions contemplated by this Agreement and
no Law or Judgment shall be in effect having any such result.
(b) All governmental filings required to be made prior to the Closing
Date with, and all governmental consents required to be obtained prior to the
Closing Date from, governmental and regulatory authorities in connection with
the transactions contemplated by this Agreement shall have been made or
obtained, and any required waiting period in connection therewith shall have
elapsed.
(c) Sellers shall have received from Purchaser a certificate, signed by
an appropriate officer of Purchaser, in the form attached hereto as 6.2(c).
(d) Purchaser shall have delivered to Sellers the Purchase Price as
provided in Section 2.2.
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<PAGE> 28
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY SELLERS.
(a) From and after the Closing Date and subject to the provisions of
this Article VII and Article VIII, Sellers agrees to pay and to indemnify fully,
hold harmless and defend Purchaser, its Subsidiaries, and Affiliates (including
the TARGET Company), and each of their respective agents, directors, officers,
employees, shareholders, consultants, representatives, successors and assigns,
from and against any and all claims and/or Liabilities, damages, penalties,
Judgments, assessments, losses, costs and expenses (including, but not limited
to, reasonable attorneys' fees) (collectively, "DAMAGES") arising out of
relating to or based upon allegations of:
(i) any inaccuracy or breach of any representation or warranty
of Sellers contained in Article III; or
(ii) any breach of any covenant or agreement of Sellers or the
TARGET Company contained in this Agreement.
(b) At Purchaser's option, Purchaser may, in accordance with the Offset
Rules, offset any Damages due from Sellers to Purchaser against, and deduct them
from, any amount due to Sellers or one of its Parents, Subsidiaries or
Affiliates [***********************************]
7.2 LIMITATION ON INDEMNIFICATION.
(a) The indemnification obligation arising pursuant to Section 7.1(a)
shall not be effective (i) except for any claim pursuant to said Section where
the amount of Damages with respect to such claim is greater than or equal to
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(b) The indemnification obligations under Section 7.1(a) (other than
those resulting from the inaccuracy or a breach of the representations and
warranties contained in Sections 3.1, 3.2, 3.12 and 3.18, which shall survive
the Closing until the expiration of the statutes of limitation applicable to the
matters addressed therein) shall terminate on the later of
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7.3
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(e)
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ARTICLE VIII
TAX MATTERS
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8.2 CALCULATION OF INDEMNITY PAYMENTS. Sellers agree that, with respect
to any payment or indemnity to or for the benefit of a Tax Indemnitee under this
Article VIII, Sellers' indemnity obligations shall include the payment of such
amount, if any, as shall be necessary to hold any Tax Indemnitee harmless
[*******************] from all Taxes required to be paid by such Tax Indemnitee
with respect to such payment or indemnity (including any payments made pursuant
to this Section 8.2) under any Law.
8.3 TAX RETURNS.
(a) (i) Sellers shall be responsible for the timely filing (taking into
account any extensions received from the relevant Governmental Body) of all Tax
Returns required by Law to be filed by the TARGET Company on or prior to the
Closing Date, and (ii) such Tax Returns shall be true, correct and complete in
all material respects and accurately set forth all items to the extent required
to be reflected or included in such Tax Returns by applicable Laws. Such Tax
Returns shall be prepared on a basis consistent with those prepared for prior
taxable periods unless a different treatment of any item is required by an
intervening change in Law.
(b) Purchaser shall be responsible for the timely filing (taking into
account any extensions received from the relevant Governmental Body) of all Tax
Returns required by Law to be filed by the TARGET Company after the Closing
Date.
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8.4 SURVIVAL. All obligations under this Article VIII shall survive the
Closing hereunder and continue [***********] following the expiration of the
statute of limitations on assessment of the relevant Tax. Notwithstanding the
foregoing, any claim for indemnification shall survive such termination date if
any party, prior to such termination date, shall have advised the other party in
writing of facts that constitute or may give rise to an alleged claim for
indemnification under this Article VIII (such claim, a "TAX CLAIM"), specifying
in reasonable detail the basis under this Agreement for such claim.
8.5 EXCLUSIVE REMEDY. Notwithstanding anything to the contrary in this
Agreement, Tax Claims will be governed exclusively by this Article VIII.
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ARTICLE IX
TERMINATION
9.1 GROUNDS FOR TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date by the written agreement of Purchaser and Sellers
and, [*******************], by any party hereto in the event the Closing has not
occurred prior to such date.
32
<PAGE> 33
9.2 EFFECT OF TERMINATION. If this Agreement is terminated as permitted
under Section 9.1, such termination shall be without liability to any party to
this Agreement or any Affiliate, director, officer or representative of such
party, except for liability arising from a willful breach of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement, together with the schedules,
attachments and exhibits hereto, constitutes the entire understanding among the
parties hereto with respect to the subject matter contained herein and therein
and supersede any other understandings and agreements among them respecting such
subject matter.
10.2 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not affect its interpretation.
10.3 NUMBER. Words of number may be read as singular or plural, as
required by context.
10.4 SCHEDULES. Each Schedule referred to herein is incorporated into
this Agreement by such reference and is deemed a part of this Agreement.
10.5 NOTICES. All notices, waivers and other communications under this
Agreement shall be in writing and shall be effective upon actual delivery or
refusal of delivery, to the following address:
If to Purchaser to:
[****************************
*********************
******************
****************]
If to Sellers to:
[****************************
*********************
******************
****************]
Notices may be given by electronic facsimile device or receipted
courier service; provided that for notice by electronic facsimile device to be
effective, its receipt must be acknowledged with an electronic confirmation of
receipt. Notice of any change in any such address shall also be given in the
manner set forth above.
33
<PAGE> 34
10.6 WAIVER. The failure of any party to insist upon strict performance
of any of the terms or conditions of this Agreement will not constitute a waiver
of any of its rights hereunder.
10.7 FURTHER ACTIONS AND ASSURANCES. The parties shall execute and
deliver such additional documents and shall cause such additional actions to be
taken before, on, and after the Closing Date, as may be required or reasonably
desirable further to effect or evidence the provisions of this Agreement and the
transactions contemplated by this Agreement.
10.8 SEVERABILITY. If any provision of this Agreement is held illegal,
invalid, or unenforceable, such illegality, invalidity or unenforceability will
not affect any other provision hereof. Such provision and the remainder of this
Agreement shall, in such circumstances, be deemed modified to the extent
necessary to render enforceable such provision and the remaining provisions
hereof
10.9 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which taken together will constitute one instrument.
10.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
obligations or duties hereunder may be assigned by any party without the prior
written consent of the other parties, except that Purchaser may make such an
assignment to any of its wholly owned subsidiaries without such consent,
PROVIDED, HOWEVER, that, notwithstanding any such assignment, Purchaser shall
remain obligated to perform its obligations under this Agreement and such
assignment shall not result in any additional cost or obligation to Sellers.
10.11 SUCCESSORS AND ASSIGNS. This Agreement binds, inures to the
benefit of, and is enforceable by and against the successors and permitted
assigns of the parties hereto.
10.12 FEES AND COSTS. Purchaser and Sellers shall each bear their own
costs and expenses, including, without limitation, legal and consulting fees,
for conducting due diligence and drafting and negotiating this Agreement.
10.13 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the United States of America and the State of
Florida, without giving effect to principles of conflicts of law thereof.
10.14 NO PARTY DEEMED DRAFTER. In the event of a legal controversy
concerning this Agreement and its interpretation, Purchaser and Sellers have had
the opportunity for full representation by legal counsel and no party shall be
deemed to be the drafter of this Agreement.
10.15 REMEDIES CUMULATIVE. Any of the remedies available to a party in
respect of a default by any other party hereunder shall be cumulative and not
34
<PAGE> 35
exclusive, and the non-defaulting party may pursue one or more of such remedies
at such time or times as such non-defaulting party may elect.
10.16 AMENDMENTS. This Agreement may be amended or supplemented only by
a written instrument duly executed by all of the parties hereto.
10.17 NO THIRD-PARTY RIGHTS. Nothing in this Agreement is intended or
shall be construed to confer upon any Person other than Purchaser and Sellers
any right, remedy or claim under, or by reason of, this Agreement.
10.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Sellers and the
TARGET Company hereby irrevocably appoint CT Corporation System with an office
on the date hereof at 1200 South Pine Island Road, Plantation, Florida 33324 and
its successors as agent upon which process may be served in any action arising
out of or based upon this Agreement which may be instituted in any state or
Federal court in Miami-Dade County, Florida. Sellers Purchaser and the TARGET
Company agree that all judicial actions or proceedings with respect to this
Agreement may be brought in any state or federal court of competent jurisdiction
in Miami-Dade County, Florida, United States of America and, by execution and
delivery of this Agreement, accept and submit to, for themselves and in
connection with their properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts in any such action or
proceeding and irrevocably agree to be bound by any final judgment rendered
thereby in connection with this Agreement from which no appeal has been taken or
is available. Sellers Purchaser and the TARGET Company each irrevocably agree
that all process in any such proceedings in any such court may be effected by
serving such process, in accordance with Florida law, on CT Corporation, at the
address specified above, or to the TARGET Company and Sellers at their addresses
set forth in Section 10.5 or to the TARGET Company and the Sellers at such other
address of which Purchaser shall have been notified pursuant thereto, such
service being hereby acknowledged by Sellers and the TARGET Company to be
effective and binding service in every respect. Each of Sellers and the TARGET
Company irrevocably waives, to the fullest extent it may effectively do so, any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens or any right of jurisdiction on
account of the place of residence or domicile which it may now or hereafter have
to the bringing of any such action or proceeding in any such jurisdiction.
Nohing herein shall affect the right to serve process in any other manner
permitted by law. To the extent that Sellers Purchaser or the TARGET Company
have or hereafter may acquire any immunity from jurisdiction of any court or
from any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, Sellers Purchaser and the TARGET Company to the
extent permitted by law hereby irrevocably waive such immunity with respect of
their respective obligations under this Agreement and, without limiting the
generality of the foregoing, agrees that the waivers set forth in this section
35
<PAGE> 36
shall have the fullest scope permitted under the United States Foreign Sovereign
Immunities Act of 1976, as amended, and are intended to be irrevocable for
purposes of such Act. A final judgment in any action or proceeding arising out
of or relating to this Agreement shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.
10.19 WAIVER OF JURY TRIAL. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
10.20 NO PUNITIVE DAMAGES. Notwithstanding anything to the contrary
elsewhere in this Agreement, no party (or its Affiliates) shall, in any event,
be liable to any other party (or its Affiliates for any punitive damages.
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[Execution page follows]
36
<PAGE> 37
IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the date first written above.
[**************************]
By: ____________________________
Name: [**************]
Title: [***************************]
By: [******************************]
By: _____________________________
Name:
Title:
[*********************]
By: _____________________________
Name: [************]
Title: [********]
[*************]
By: _____________________________
Name: [**************]
Title: [**********]
37
<PAGE> 38
SCHEDULE 1.1
The Target Company has the following credit facility with the Rabobank
International, Antwerp branch (the "Bank"):
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<PAGE> 39
SCHEDULE 3.1.d. LIST OF ALL THE AUTHORIZED, ISSUED AND OUTSTANDING
SHARES OF THE CAPITAL STOCK OF THE TARGET COMPANY.
[******************************]
<PAGE> 40
SCHEDULE 3.2.a. LIST OF PLEDGED SHARES
The following number of shares are pledged:
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<PAGE> 41
SCHEDULE 3.3(b)
<PAGE> 42
SCHEDULE 3.4
The sale of [***] may in certain cases constitute a termination without
Cause under the Commission Brokers Agreement. However, the parties intend to
terminate the Commission Brokers Agreement at Closing.
<PAGE> 43
SCHEDULE 3.6
(b) None
(c) None
<PAGE> 44
SCHEDULE 3.8
MATERIAL CONTRACTS
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<PAGE> 45
SCHEDULE 3.9
LACK OF LEGAL COMPLIANCE
(a) None
(b) None
<PAGE> 46
SCHEDULE 3.13
Employment contract with Banana Marketing Belgium NV [****]
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<PAGE> 47
SCHEDULE 3.14(a)
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<PAGE> 48
SCHEDULE 3.16
1. Banana Marketing Belgium N.V. has the following bank accounts with the
following banks:
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****]
2. Banana Marketing Belgium N.V. has the following facilities:
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<PAGE> 49
SCHEDULE 6.1(d)
Legal Opinions
<PAGE> 50
SCHEDULE 6.1(e)
Sellers' certificates
<PAGE> 51
SCHEDULE 6.1(h)
Obligations to [*************************************] under the [*******]
Agreement referred to in Schedule 3.14(a), relating to [******] shipments.
<PAGE> 52
SCHEDULE 6.2(c)
Purchaser's Certificate
<PAGE> 1
EXHIBIT 2.6
FRESH DEL MONTE PRODUCE INC.
1999 SHARE INCENTIVE PLAN
EFFECTIVE AS OF MAY 11, 1999
<PAGE> 2
1. PURPOSE OF THE PLAN
This Fresh Del Monte Produce Inc. 1999 Share Incentive Plan is
intended to promote the interests of the Company by providing the non-employee
directors of FDMP and the employees of the Company, who are largely responsible
for the management, growth and protection of the business of the Company, with
incentives and rewards to encourage them to continue with the Company and by
attracting personnel with experience and ability to the Company.
2. DEFINITIONS
As used in the Plan, the following definitions apply to the
terms indicated below:
(a) "Board" shall mean the Board of Directors of FDMP or any
committee appointed by the Board of Directors of FDMP to the extent any or all
of the powers of the Board hereunder are delegated to such committee.
(b) "Cause," when used in connection with the termination of a
Participant's employment with the Company, shall mean (i) the willful failure of
the Participant to perform substantially the Participant's duties with the
Company (other than any such failure resulting from incapacity due to physical
or mental illness) that has a material adverse effect on the Company or a
Substantial Subsidiary; (ii) gross misconduct materially injurious to the
Company or a Substantial Subsidiary; or (iii) the conviction of the Participant
of a felony or other serious crime involving moral turpitude. "Cause," when used
in connection with the termination of a Participant's membership on the Board of
Directors of FDMP, shall mean removal for cause in accordance with applicable
law or otherwise in accordance with the provisions contained in the Articles of
Association of FDMP.
(c) "Change of Control" shall mean the occurrence of one or
more of the following events:
(i) with respect to all Participants, any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company, or, with
respect to a Participant employed by a Substantial Subsidiary, of such
Substantial Subsidiary, to any individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof (a "Person") or group of
related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"),
together with any Affiliates (as defined below) thereof other than to the
members of the Abu-Ghazaleh family, or any entities controlled by such members
or any Affiliates of such entities (together, the "Abu-Ghazaleh Group");
(ii) with respect to all Participants, the approval by the
holders of any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of share capital, including each
class of shares and preferred shares (together, "Shares"), of the Company of any
plan or proposal for the liquidation or dissolution of the Company;
2
<PAGE> 3
(iii) (A) with respect to all Participants, any Person or
Group (other than the Abu-Ghazaleh Group or any member thereof) shall become the
owner, directly or indirectly, beneficially or of record, of shares representing
more than 30% of the aggregate ordinary voting power represented by the issued
and outstanding Shares (the "Voting Shares") of the Company, or, with respect to
a Participant employed by a Substantial Subsidiary, of such Substantial
Subsidiary, and (B) the Abu-Ghazaleh Group shall beneficially own, directly or
indirectly, in the aggregate a lesser percentage of the Voting Shares of the
Company or such Substantial Subsidiary, as the case may be, than such other
Person or Group; or
(iv) with respect to all Participants, the replacement of a
majority of the Board of Directors of FDMP over a two-year period from the
directors who constituted the Board of Directors of FDMP at the beginning of
such period, and such replacement shall not have been approved by a vote of at
least a majority of the Board of Directors of FDMP then still in office who
either were members of such Board of Directors at the beginning of such period
or whose election as a member of such Board of Directors was previously so
approved or who were nominated by, or designees of, the Abu-Ghazaleh Group.
For purposes of this Section 2(c), "Affiliate" shall mean,
with respect to any specified Person, any other Person who directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, such specified Person. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" or "controlled" have meanings correlative of the foregoing.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(e) "Company" shall mean FDMP and its subsidiaries.
(f) "Disability" shall mean a physical or mental condition
entitling a Participant to benefits under the long-term disability policy
maintained by the Company and applicable to him. A Participant's employment
shall be deemed to have terminated as a result of Disability on the date as of
which he is first entitled to receive disability benefits under such policy.
With respect to any Participant who is a non-employee director of FDMP,
"Disability," when used in connection with the termination of a Participant's
membership on the Board of Directors of FDMP, shall mean removal for disability
in accordance with applicable law or otherwise in accordance with the provisions
contained in the Articles of Association of FDMP.
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(h) "Fair Market Value" shall mean, as of any date, (i) the
average of the high and low sales prices on such day of an Ordinary Share as
reported on the principal securities exchange on which Ordinary Shares are then
listed or admitted to trading or (ii) if not so reported, the average of the
closing bid and ask prices on such day as reported on the National Association
of Securities Dealers Automated Quotation System or (iii) if not so reported, as
furnished by any member of the National Association of Securities Dealers, Inc.
selected by the Board. The Fair Market Value of an Ordinary Share as of any such
date on which the applicable exchange or inter-dealer quotation system through
which trading in the Ordinary Shares regularly occurs is closed shall be the
Fair Market Value determined pursuant to the preceding sentence as of the
immediately preceding date on which such exchange or system is open for trading.
In the event that the price of an Ordinary Share shall not be so reported or
furnished, the Fair Market Value shall be determined by the Board in good faith.
3
<PAGE> 4
(i) "FDMP" shall mean Fresh Del Monte Produce Inc., a Cayman
Islands company.
(j) "ISO" shall mean an Option that is intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the Code.
(k) "Option" shall mean an option to purchase Ordinary Shares
granted pursuant to Section 7 hereof.
(l) "Ordinary Shares" shall mean the Ordinary Shares of FDMP,
$.01 par value per share.
(m) "Participant" shall mean either (i) an employee of the
Company or (ii) a non-employee director of FDMP, in either case, who is eligible
to participate in the Plan and to whom an Option is granted pursuant to the
Plan, and upon his death, his successors, heirs, executors and administrators,
as the case may be.
(n) "Plan" shall mean this Fresh Del Monte Produce Inc. 1999
Share Incentive Plan, as it may be amended from time to time.
(o) "Substantial Subsidiary" shall mean Del Monte Fresh
Produce Company, Del Monte Fresh Produce N.A., Inc., Del Monte Fresh Produce
International, Inc., Compania de Desarrollo Bananero de Guatemala, S.A.,
Corporacion de Desarrollo Agricola Del Monte S.A., Del Monte Fresh Produce
(Chile) S.A., and such other subsidiaries of FDMP as the Board may from time to
time determine.
(p) "Transfer" shall mean any transfer, sale, assignment,
gift, testamentary transfer, pledge, hypothecation or other disposition of any
interest. "Transferee," "Transferor" and "Transferable" shall have correlative
meanings.
3. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 8 hereof, the
Board may grant Options to Participants with respect to 2,000,000 Ordinary
Shares. To the extent that Options granted under the Plan are exercised, the
shares covered thereby will be unavailable for future grants under the Plan. In
the event that any outstanding Option expires, terminates or is cancelled for
any reason, the Ordinary Shares subject to the unexercised portion of such
4
<PAGE> 5
Option shall again be available for grants under the Plan. Subject to adjustment
as provided in Section 8 hereof, no Participant in the Plan may be granted
Options with respect to more than an aggregate of 1,000,000 Ordinary Shares. To
the extent that Options expire, terminate or are cancelled without having been
exercised, the shares underlying such Options shall continue to count against
the maximum aggregate number of Ordinary Shares with respect to which Options
may be granted to a Participant.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board. The Board shall
from time to time designate the key employees of the Company and the
non-employee directors of FDMP who shall be granted Options, the number of
shares subject to each Option and the terms and conditions on which each Option
shall be granted.
The Board shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and the
terms of any Option issued under it and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Board shall be
final and binding on all parties and all decisions, determinations, selections
and other actions permitted or required to be taken or made by the Board with
respect to the Plan shall be subject to the absolute discretion of the Board.
The Board may, in its absolute discretion, accelerate the date
on which any Option granted under the Plan becomes exercisable or extend the
term of any Option to a date not more than ten (10) years from the date such
Option was granted.
Except as expressly provided in Section 8 hereof, the Company
may not take any action to adjust the exercise price of any Options once they
have been granted in accordance with Section 7 hereof below.
Whether an authorized leave of absence, or absence in military
or government service, shall constitute termination of employment shall be
determined by the Board.
No member of the Board shall be liable for any action,
omission, or determination relating to the Plan, and the Company shall indemnify
and hold harmless each member of the Board and each other director or employee
of the Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Board) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action,
omission or determination was taken or made by such member, director or employee
in bad faith and without reasonable belief that it was in the best interests of
the Company.
5. ELIGIBILITY
The persons who shall be eligible to receive Options pursuant
to the Plan shall be such employees of the Company who are largely responsible
5
<PAGE> 6
for the management, growth and protection of the business of the Company and
such non-employee directors of FDMP as the Board shall select from time to time.
6. GRANT OF OPTIONS
Prior to May 31, 2004, the Board shall grant Options with
respect to a number of Ordinary Shares no less than the total number of Ordinary
Shares initially authorized under the Plan, subject to adjustment as provided in
Section 8 hereof.
7. OPTIONS
Each Option granted pursuant to the Plan shall be evidenced by
an agreement in the form attached hereto as Exhibit A or B, as appropriate, or
such other form as the Board shall from time to time approve. Options shall
comply with and be subject to the following terms and conditions:
(a) IDENTIFICATION OF OPTIONS
All Options shall be clearly identified in the agreement
evidencing their grant either as non-qualified share options that are not
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Code or as ISOs.
(b) EXERCISE PRICE
The exercise price per share of any Option granted under the
Plan shall be the Fair Market Value of an Ordinary Share on the date on which
such Option is granted.
(c) TERM OF OPTIONS
Each Option shall become exercisable with respect to twenty
percent (20%) of the number of Ordinary Shares initially subject to such Option
on the date on which it is granted and with respect to an additional twenty
percent (20%) of the number of such shares on each of the next four
anniversaries of such date; PROVIDED, HOWEVER, that no Option shall be
exercisable after the expiration of ten (10) years from the date such Option is
granted; and PROVIDED, FURTHER, that each Option shall be subject to earlier
expiration, termination, cancellation or exercisability as provided in the Plan.
(d) EFFECT OF TERMINATION OF EMPLOYMENT OR BOARD
MEMBERSHIP
(i) In the event that a Participant's employment with the
Company is terminated by the Company for Cause or a Participant's membership on
the Board of Directors of FDMP is terminated for Cause, (A) Options granted to
such Participant, to the extent that they were exercisable at the time of such
termination, shall remain exercisable until the expiration of thirty (30) days
after such termination, on which date they shall expire, and (B) Options granted
to such Participant, to the extent that they were not exercisable at the time of
such termination, shall expire at the close of business on the date of such
termination; PROVIDED, HOWEVER, that no Option shall be exercisable after the
expiration of its term.
6
<PAGE> 7
(ii) In the event that a Participant's employment with the
Company is terminated by the Company without Cause or a Participant's membership
on the Board of Directors of FDMP is terminated without Cause (including by
reason of the Participant losing an election for a position on such Board or
failing to be nominated for re-election upon the expiration of his term), (A)
Options granted to such Participant, to the extent that they were exercisable at
the time of such termination, shall remain exercisable until the expiration of
ninety (90) days after such termination, on which date they shall expire, and
(B) Options granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall vest and become immediately
exercisable on the date of such termination and shall remain exercisable until
the expiration of ninety (90) days after such termination, on which date they
shall expire; PROVIDED, HOWEVER, that no Option shall be exercisable after the
expiration of its term.
(iii) In the event that a Participant's employment with the
Company terminates (other than on account of a termination by the Company or
Disability or death of the Participant) or a Participant's membership on the
Board of Directors of FDMP terminates (other than on account of a termination
for Cause or without Cause or Disability or death of the Participant, but
including by reason of the Participant failing to seek re-election to such
Board), (A) Options granted to such Participant, to the extent that they were
exercisable at the time of such termination, shall remain exercisable until the
expiration of ninety (90) days after such termination, on which date they shall
expire, and (B) Options granted to such Participant, to the extent that they
were not exercisable at the time of such termination, shall expire at the close
of business on the date of such termination; PROVIDED, HOWEVER, that no Option
shall be exercisable after the expiration of its term.
(iv) In the event that a Participant's employment with the
Company or a Participant's membership on the Board of Directors of FDMP
terminates on account of Disability or death of the Participant, (A) Options
granted to such Participant, to the extent that they were exercisable at the
time of such termination, shall remain exercisable until the expiration of one
(1) year after such termination, on which date they shall expire, and (B)
Options granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire at the close of
business on the date of such termination; PROVIDED, HOWEVER, that no Option
shall be exercisable after the expiration of its term.
(e) CERTAIN TERMS AND CONDITIONS
(i) Each Option shall be exercisable in whole or in part;
PROVIDED, THAT no partial exercise of an Option shall be for an aggregate
exercise price of less than $1,000; and PROVIDED, FURTHER, that no fractional
Ordinary Shares shall be issued under the Plan. The partial exercise of an
Option shall not cause the expiration, termination or cancellation of the
remaining portion thereof. Upon the partial exercise of an Option, the agreement
evidencing such Option, marked with any notations deemed appropriate by the
Board, shall be returned to the Participant exercising such Option.
(ii) An Option shall be exercised by delivering notice to
FDMP's principal office, to the attention of its Securities Compliance Officer,
no less than three (3) business days in advance of the effective date of the
proposed exercise. Such notice shall be accompanied by the agreement evidencing
7
<PAGE> 8
the Option, shall specify the number of Ordinary Shares with respect to which
the Option is being exercised and the effective date of the proposed exercise
and shall be signed by the Participant. The Participant may withdraw such notice
at any time prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise. Payment for Ordinary
Shares purchased upon the exercise of an Option shall be made on the effective
date of such exercise in cash, by certified check, bank cashier's check or wire
transfer, or, to the extent permitted by the Board, by tender to FDMP of
Ordinary Shares already owned by the Participant, which shares shall be valued
at Fair Market Value on the effective date of the proposed exercise.
Notwithstanding any provision of this Section 7(e)(ii), the Board may authorize
deviations from the procedures set forth herein in order to enable Participants
to engage in "cashless exercise" transactions through securities brokers and/or
the transfer agent for the Ordinary Shares.
(iii) Certificates for Ordinary Shares purchased upon the
exercise of an Option shall be issued in the name of the Participant and
delivered to the Participant or, at the Board's discretion, issued and delivered
to or on behalf of a book-entry depository with appropriate instructions to
credit an account of the Participant as soon as practicable following the
effective date on which the Option is exercised.
(iv) During the lifetime of a Participant, each Option granted
to him shall be exercisable only by him. No Option shall be Transferable
otherwise than by will or by the laws of descent and distribution.
(f) CERTAIN TERMS APPLICABLE TO ISOS
(i) The aggregate Fair Market Value of Ordinary Shares with
respect to which ISOs are exercisable for the first time by a Participant during
any calendar year under the Plan and any other share option plan of FDMP or any
"subsidiary corporation" (within the meaning of Section 424(f) of the Code)
shall not exceed $100,000. Such Fair Market Value shall be determined as of the
date on which each such ISO is granted. In the event that such aggregate Fair
Market Value exceeds $100,000, then ISOs granted hereunder to such Participant
shall, to the extent of such excess and in the order in which they were granted,
automatically be deemed not to be ISOs, but all other terms and provisions of
such ISOs shall remain unchanged.
(ii) No ISO may be granted to an individual if, at the time of
the proposed grant, such individual owns shares possessing more than ten percent
of the total combined voting power of all classes of shares of FDMP or any of
its "subsidiary corporations" (within the meaning of Section 424(f) of the
Code), unless (A) the exercise price of such ISO is at least one hundred and ten
percent of the Fair Market Value of an Ordinary Share at the time such ISO is
granted and (B) such ISO is not exercisable after the expiration of five (5)
years from the date such ISO is granted.
(iii) No ISO may be granted to a Participant who is a
non-employee director of FDMP.
8
<PAGE> 9
(g) CONSEQUENCES UPON CERTAIN TRANSACTIONS
Upon the occurrence of a Change of Control with respect to a
Participant, all outstanding Options of such Participant shall vest and become
immediately exercisable and shall remain exercisable until their expiration,
termination or cancellation pursuant to the terms of the Plan.
(i) In connection with such vesting upon a Change of Control,
if it is determined that any payment or benefit provided by the Company or one
of its Substantial Subsidiaries or any other person to or for the benefit of a
Participant (whether paid or payable or provided or providable pursuant to the
terms of this Plan or otherwise except with respect to any stock options granted
under the Company's 1997 Share Incentive Plan prior to the effective date
hereof) (a "Payment") would be subject to an excise tax imposed by Sections 280G
or 4999 or any similar provisions of the Code, or any interest or penalties are
incurred by the Participant with respect to such excise tax (such excise tax,
together with any interest and penalties, hereinafter the "Excise Tax"), then
the Company or any Significant Subsidiary shall pay to or on behalf of the
Participant an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Participant of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest or penalties imposed with respect thereto)
and Excise Tax imposed on the Gross-Up Payment, the Participant retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.
(ii) All determinations required to be made under this Section
7(g), including whether and when a Gross-Up Payment is required and the amount
of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by an independent public accounting firm with a
national reputation in the United States that is selected by the Company (the
"Accounting Firm") which shall provide detailed support and calculations both to
the Participant and to the Company within fifteen (15) business days after the
receipt of notice from the Company that there has been a Payment. The amount of
any Gross-Up Payment shall be paid in a lump sum within seven (7) days following
such determination by the Accounting Firm. In the event that the Accounting
Firm's determination is not finally accepted by the Internal Revenue Service
(the "IRS') upon any audit, then an appropriate adjustment, including penalties
and interest, if any, shall be computed (with an additional Gross-Up Payment, if
applicable) by the Accounting Firm based upon the final amount of the Excise Tax
so determined. Such adjustment shall be paid by the appropriate party in a lump
sum within seven (7) days following the computation of such adjustment by the
Accounting Firm. All fees and expenses of the Accounting Firm shall be borne
solely by the Company.
(iii) A Participant and the Company shall each provide their
reasonable cooperation to one another in connection with an IRS audit or inquiry
of or to either party in connection with any Payment or Excise Tax due or
Gross-Up Payment made in connection herewith.
8. ADJUSTMENT UPON CHANGES IN ORDINARY SHARES
9
<PAGE> 10
(a) Subject to any required action by the shareholders of
FDMP, in the event of any increase or decrease in the number of issued Ordinary
Shares resulting from a subdivision or consolidation of Ordinary Shares or the
payment of a share dividend (but only on the Ordinary Shares), or any other
increase or decrease in the number of such shares effected by FDMP without
receipt or payment of consideration, (i) the Board shall proportionally adjust
the maximum aggregate number of Ordinary Shares with respect to which the Board
may grant Options, including the maximum aggregate which may be granted to any
individual and (ii) the Board shall proportionally adjust the number of Ordinary
Shares subject to each outstanding Option and the exercise price per Ordinary
Share of each such Option.
(b) Subject to any required action by the shareholders of
FDMP, in the event that FDMP shall be the surviving company in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of Ordinary Shares receive securities of another corporation), each Option
outstanding on the date of such merger or consolidation shall pertain to and
apply to the securities which a holder of the number of Ordinary Shares subject
to such Option would have received in such merger or consolidation.
(c) In the event of a dissolution or liquidation of FDMP, a
sale of all or substantially all of FDMP's assets, a merger or consolidation
involving FDMP in which FDMP is not the surviving company, a merger or
consolidation involving FDMP in which FDMP is the surviving company but the
holders of Ordinary Shares receive securities of another company or corporation
and/or other property, including cash, or any other similar transaction, the
Board shall have the power to:
(i) cancel, effective immediately prior to the occurrence of
such event, each Option outstanding immediately prior to such event (whether or
not then exercisable), and, in full consideration of such cancellation, pay to
the Participant to whom such Option was granted an amount in cash, for each
Ordinary Share subject to such Option, equal to the excess of (A) the value, as
determined by the Board in good faith, of the property (including cash) received
by the holder of an Ordinary Share as a result of such event over (B) the
exercise price of such Option; or
(ii) permit Participants to exercise their Options and
participate in such transaction on a basis no less favorable than that afforded
other owners of Ordinary Shares.
(d) Except as expressly provided in the Plan, no Participant
shall have any rights by reason of any subdivision or consolidation of any class
of shares, the payment of any dividend, any increase or decrease in the number
of shares of any class or any dissolution, liquidation, merger or consolidation
of FDMP or any other company or corporation. Except as expressly provided in the
Plan, no issue by FDMP of shares of any class, or securities convertible into
shares of any class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number of Ordinary Shares which may be subject to
Options pursuant to the Plan or which are subject to an Option or the exercise
price of any Option. In the event of any change in the capitalization of FDMP or
10
<PAGE> 11
corporate change other than those specifically referred to herein, the Board
will make such adjustments in the number and class of shares which may be
granted under the Plan or which are subject to Options outstanding on the date
on which such change occurs and in the per share exercise price of each such
Option as the Board may consider necessary or appropriate.
9. SECURITIES MATTERS
FDMP shall be under no obligation to effect the registration
pursuant to the Securities Act of 1933, as amended, of any Ordinary Shares to be
issued hereunder or to effect similar compliance under any state laws or any
laws of the Cayman Islands. Notwithstanding anything herein to the contrary,
FDMP shall not be obligated to cause to be issued or delivered any certificates
evidencing Ordinary Shares pursuant to the Plan unless and until FDMP is advised
by its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which Ordinary Shares are traded.
The Board may require, as a condition of the issue and delivery of certificates
evidencing Ordinary Shares pursuant to the terms hereof, that the recipient of
such shares make such covenants, agreements and representations, and that such
certificates bear such legends, as the Board deems necessary or desirable.
10. RIGHTS AS A SHAREHOLDER
No person shall have any rights as a shareholder with respect
to any Ordinary Shares covered by or relating to any Option granted pursuant to
the Plan until the date of issue of such Ordinary Shares which shall be the date
the Ordinary Shares are recorded as issued on the register of members of FDMP.
Except as otherwise expressly provided in Section 8 hereof, no adjustment to any
Option shall be made for dividends or other rights for which the record date
occurs prior to the date of issue of such Ordinary Shares.
11. NO SPECIAL RIGHTS; NO RIGHT TO OPTION
(a) Nothing contained in the Plan or any Option shall confer
upon any Participant any right with respect to the continuation of his
employment by the Company or his membership on the Board of Directors of FDMP or
interfere in any way with the right of the Board, the Company or the holders of
the Ordinary Shares at any time to terminate such employment or such membership
or to increase or decrease the compensation of the Participant from the rate in
effect at the time of the grant of an Option.
(b) No person shall have any claim or right to receive an
Option hereunder. The Board's granting of an Option to a Participant at any time
shall neither require the Board to grant an Option to such Participant or any
other Participant or other person at any time nor preclude the Board from making
subsequent grants to such Participant or any other Participant or other person.
12. WITHHOLDING TAXES
(a) CASH REMITTANCE
11
<PAGE> 12
Whenever Ordinary Shares are to be issued upon the exercise of
an Option, the Company shall have the right to require the Participant to remit
to the Company in cash an amount sufficient to satisfy federal, state and local
withholding tax requirements, if any, attributable to such exercise. In
addition, upon the making of any cash payment pursuant to the Plan, the Company
shall have the right to withhold from such payment an amount sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise.
(b) SHARE REMITTANCE OR WITHHOLDING
At the election of the Participant, to the extent permitted by
the Board, when Ordinary Shares are to be issued upon the exercise of an Option,
the Participant may tender to FDMP a number of Ordinary Shares previously owned
by him, or direct the Company to withhold a number of Ordinary Shares, the Fair
Market Value of which as of the exercise date the Board determines to be
sufficient to satisfy the federal, state and local withholding tax requirements,
if any, attributable to such exercise and not greater than the Participant's
estimated total federal, state and local tax obligations associated with such
exercise. Such election shall satisfy the Participant's obligations under
Section 12(a) hereof.
13. TERMINATION AND AMENDMENT OF THE PLAN
(a) The right to grant Options under the Plan will terminate
ten (10) years after the date the Plan is adopted by the Board of Directors of
FDMP or the date the Plan is approved by the shareholders of FDMP, whichever is
earlier. The Board of Directors of FDMP may at any time suspend or terminate the
Plan or revise or amend it in any respect whatsoever, PROVIDED THAT no such
action will, without the consent of a Participant, adversely affect a
Participant's rights under previously granted Options.
(b) Notwithstanding the foregoing, upon the termination of the
Plan, each Option outstanding at the time of such termination, if any, shall
expire and be cancelled and, in consideration therefor, the Participant to whom
each such Option was granted shall be entitled to a payment in cash, equal to
the product of (i) the excess, if any, of (A) the Fair Market Value of an
Ordinary Share as of the date of such termination over (B) the per share
exercise price of the Option and (ii) the number of shares subject to the Option
on the date of such termination. Each such Option the per share exercise price
of which equals or exceeds the Fair Market Value of an Ordinary Share as of the
date of such termination shall automatically expire and be cancelled on such
date without any payment therefor.
14. TRANSFERS UPON DEATH
Upon the death of a Participant, outstanding Options granted
to such Participant may be exercised only by the executors or administrators of
the Participant's estate or by any person or persons who shall have acquired
such right to exercise by will or by the laws of descent and distribution. No
Transfer by will or the laws of descent and distribution of any Option or the
right to exercise any Option shall be effective to bind the Company unless the
12
<PAGE> 13
Board shall have been furnished with (a) written notice thereof and with a copy
of the will and/or such evidence as the Board may deem necessary to establish
the validity of the Transfer and (b) an agreement by the Transferee to comply
with all the terms and conditions of the Option and the Plan that are or would
have been applicable to the Participant and to be bound by the acknowledgements
made by the Participant in connection with the grant of the Option.
Except as provided in this Section 14, no Option under the
Plan shall be Transferable.
13
<PAGE> 14
15. NO OBLIGATION TO EXERCISE
The grant to a Participant of an Option shall impose no
obligation upon such Participant to exercise such Option.
16. EXPENSES AND RECEIPTS
The expenses of the Plan shall be paid by the Company. Any
proceeds received by the Company in connection with any Option will be used for
general corporate purposes.
l7. FAILURE TO COMPLY
In addition to the remedies of the Company elsewhere provided
for herein, failure by a Participant to comply with any of the terms and
conditions of the Plan or the agreement executed by such Participant evidencing
an Option, unless such failure is remedied by such Participant within ten (10)
days after having been notified of such failure by the Board, shall be grounds
for the cancellation and forfeiture of such Option, in whole or in part, as the
Board, in its absolute discretion, may determine.
18. APPLICABLE LAW
The Plan will be administered in accordance with the laws of
the State of New York, without reference to its principles of conflicts of law.
19. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon approval of the Plan by
the shareholders of FDMP.
14
<PAGE> 15
EXHIBIT A
1999 SHARE INCENTIVE PLAN
NON-QUALIFIED SHARE OPTION AWARD AGREEMENT
THIS AGREEMENT, made as of the date (the "Date of Grant") set
forth on Annex I attached hereto and incorporated herein ("Annex I"), between
FRESH DEL MONTE PRODUCE INC. (the "Company"), a Cayman Islands company, and the
person whose name appears on Annex I (the "Participant").
WHEREAS, the Company adopted and maintains the Fresh Del Monte
Produce Inc. 1999 Share Incentive Plan (the "1999 Option Plan");
WHEREAS, Section 7 of the 1999 Option Plan provides for the
award to participants in the 1999 Option Plan of non-qualified share options to
purchase Ordinary Shares of the Company, $.01 par value per share ("Ordinary
Shares").
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. GRANT OF NON-QUALIFIED SHARE OPTION. Pursuant to, and
subject to, the terms and conditions set forth herein and in the 1999 Option
Plan, the Company hereby grants, effective on the Date of Grant, to the
Participant a non-qualified share option to purchase the number of Ordinary
Shares set forth on Annex I for the price per share set forth on Annex I (the
"Option"). The Option shall be exercisable only in accordance with the
provisions of this Agreement and of the 1999 Option Plan. The Option shall
become exercisable with respect to 20% of the Ordinary Shares subject thereto on
the Date of Grant and with respect to an additional 20% of such Ordinary Shares
on each of the next four anniversaries of the Date of Grant; PROVIDED, HOWEVER,
that the Option shall not be exercisable after the expiration of ten (10) years
from the Date of Grant; PROVIDED, FURTHER, that the Option shall be subject to
earlier expiration, termination, cancellation or exercisability as provided in
the 1999 Option Plan. The Option is not intended to qualify as an "incentive
stock option" within the meaning of Section 422 of the Code.
2. NON-TRANSFERABILITY. During the lifetime of the
Participant, the Option shall be exercisable only by him and shall not be
Transferable otherwise than by will or by the laws of descent and distribution.
3. MODIFICATION AND WAIVER. Except as provided in the 1999
Option Plan with respect to determinations of the Board and subject to the
Company's Board of Directors' right to amend the 1999 Option Plan, neither this
Agreement nor any provision hereof can be changed, modified, amended,
discharged, terminated or waived orally or by any course of dealing or purported
course of dealing, but only by an agreement in writing signed by the Participant
and the Company. No such agreement shall extend to or affect any provision of
this Agreement not expressly changed, modified, amended, discharged, terminated
or waived or impair any right consequent on such a provision. The waiver of or
failure to enforce any breach of this Agreement shall not be deemed to be a
waiver or acquiescence in any other breach thereof.
A-1
<PAGE> 16
4. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to its principles of conflicts of law.
5. PARTICIPANT ACKNOWLEDGMENT. The Participant hereby
acknowledges receipt of a copy of the 1999 Option Plan.
6. INCORPORATION OF 1999 OPTION PLAN. All terms and provisions
of the 1999 Option Plan are incorporated herein and made part hereof as if
stated herein. If any provision hereof and of the 1999 Option Plan shall be in
conflict, the terms of the 1999 Option Plan shall govern. All capitalized terms
used herein and not defined herein shall have the meanings assigned to them in
the 1999 Option Plan.
7. ENTIRE AGREEMENT. This Agreement together with Annex I
represents the final, complete and total agreement of the parties hereto
respecting the Option and the matters discussed herein and this Agreement
supersedes any and all previous agreements and understandings, whether written,
oral or otherwise, relating to the Option and such matters.
IN WITNESS WHEREOF, Fresh Del Monte Produce Inc. has caused
this Agreement to be duly executed by its duly authorized officer and said
Participant has hereunto signed this Agreement on his own behalf, THEREBY
REPRESENTING THAT HE HAS CAREFULLY READ AND UNDERSTANDS THIS AGREEMENT AND THE
PLAN, as of the day and year first above written.
FRESH DEL MONTE PRODUCE INC.
-----------------------------
By:
Title:
------------------------------
Participant
A-2
<PAGE> 17
EXHIBIT B
1999 SHARE INCENTIVE PLAN
ISO AWARD AGREEMENT
THIS AGREEMENT, made as of the date (the "Date of Grant") set
forth on Annex I attached hereto and incorporated herein ("Annex I"), between
FRESH DEL MONTE PRODUCE INC. (the "Company"), a Cayman Islands company, and the
person whose name appears on Annex I (the "Participant").
WHEREAS, the Company adopted and maintains the Fresh Del Monte
Produce Inc. 1999 Share Incentive Plan (the "1999 Option Plan");
WHEREAS, Section 7 of the 1999 Option Plan provides for the
award to participants in the 1999 Option Plan of ISOs to purchase Ordinary
Shares of the Company, $.01 par value per share ("Ordinary Shares").
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. GRANT OF ISO. Pursuant to, and subject to, the terms and
conditions set forth herein and in the 1999 Option Plan, the Company hereby
grants, effective on the Date of Grant, to the Participant an ISO to purchase
the number of Ordinary Shares set forth on Annex I for the price per share set
forth on Annex I (the "Option"). The Option shall be exercisable only in
accordance with the provisions of this Agreement and of the 1999 Option Plan.
The Option shall become exercisable with respect to 20% of the Ordinary Shares
subject thereto on the Date of Grant and with respect to an additional 20% of
such Ordinary Shares on each of the next four anniversaries of the Date of
Grant; PROVIDED, HOWEVER, that the Option shall not be exercisable after the
expiration of ten (10) years from the Date of Grant; PROVIDED, FURTHER, that the
Option shall be subject to earlier expiration, termination, cancellation or
exercisability as provided in the 1999 Option Plan.
2. NON-TRANSFERABILITY. During the lifetime of the
Participant, the Option shall be exercisable only by him and shall not be
Transferable otherwise than by will or by the laws of descent and distribution.
3. DISQUALIFYING DISPOSITION. The Participant hereby agrees to
notify the Company if he sells Ordinary Shares acquired upon exercise of the
B-1
<PAGE> 18
Option before the expiration of two years after the Date of Grant or one year
after the acquisition of such Ordinary Shares.
4. MODIFICATION AND WAIVER. Except as provided in the 1999
Option Plan with respect to determinations of the Board and subject to the
Company's Board of Directors' right to amend the 1999 Option Plan, neither this
Agreement nor any provision hereof can be changed, modified, amended,
discharged, terminated or waived orally or by any course of dealing or purported
course of dealing, but only by an agreement in writing signed by the Participant
and the Company. No such agreement shall extend to or affect any provision of
this Agreement not expressly changed, modified, amended, discharged, terminated
or waived or impair any right consequent on such a provision. The waiver of or
failure to enforce any breach of this Agreement shall not be deemed to be a
waiver or acquiescence in any other breach thereof.
5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to its principles of conflicts of law.
6. PARTICIPANT ACKNOWLEDGMENT. The Participant hereby
acknowledges receipt of a copy of the 1999 Option Plan.
7. INCORPORATION OF 1999 OPTION PLAN. All terms and provisions
of the 1999 Option Plan are incorporated herein and made part hereof as if
stated herein. If any provision hereof and of the 1999 Option Plan shall be in
conflict, the terms of the 1999 Option Plan shall govern. All capitalized terms
used herein and not defined herein shall have the meanings assigned to them in
the 1999 Option Plan.
8. ENTIRE AGREEMENT. This Agreement together with Annex I
represents the final, complete and total agreement of the parties hereto
respecting the Option and the matters discussed herein and this Agreement
supersedes any and all previous agreements and understandings, whether written,
oral or otherwise, relating to the Option and such matters.
IN WITNESS WHEREOF, Fresh Del Monte Produce Inc. has caused
this Agreement to be duly executed by its duly authorized officer and said
Participant has hereunto signed this Agreement on his own behalf, THEREBY
REPRESENTING THAT HE HAS CAREFULLY READ AND UNDERSTANDS THIS AGREEMENT AND THE
PLAN, as of the day and year first above written.
FRESH DEL MONTE PRODUCE INC.
-----------------------------
By:
Title:
-----------------------------
Participant
B-2
<PAGE> 1
Exhibit 2.7
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-7870) pertaining to the Fresh Del Monte Produce Inc. 1997 Share
Incentive Plan of our reports dated February 14, 2000, with respect to the
consolidated financial statements and schedule of Fresh Del Monte Produce Inc.
included in Fresh Del Monte Produce Inc.'s Annual Report (Form 20-F) for the
year ended December 31, 1999.
/s/ Ernst & Young LLP
Miami, Florida
March 20, 2000
<PAGE> 1
EXHIBIT 3.1
Subsidiaries of FRESH DEL MONTE PRODUCE INC.
as of 03/99
<TABLE>
<CAPTION>
COMPANY NAME PLACE/DATE OF INCORPORATION
<S> <C>
Agricola Francal S.A. Costa Rica
05/30/75
Agricola Las Brenas Alabre S.A. Costa Rica
Agricola UAC Limitada Chile
09/10/84
Agricola Villa Alegre Limitada Chile
06/26/86
Alcazar Shipping Corporation Cayman Islands
11/16/99
Algeciras Shipping Corporation Cayman Islands
11/16/99
Alhambra Shipping Corporation Cayman Islands
01/12/98
Alicante Shipping Corporation Cayman Islands
11/16/99
Almeria Shipping Corporation Cayman Islands
12/29/95
Alquds Limited N.V. Netherlands Antilles
03/10/89
Andalucia Shipping Corporation Cayman Islands
10/11/91
Bananera Maya, Sociedad Anonima Guatemala
04/17/89
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
<S> <C>
Cadiz Shipping Corporation Cayman Islands
11/16/99
Cartorama, S.A. Ecuador
1992
Choice Farms, Inc. Delaware
11/14/91
Claverton Limited Hong Kong
11/10/89
Comercializadora Agricola Guaternalteca S.A. Guatemala
(Comaguasa) 04/23/91
Comercializadora Internacional Consultoria y Colombia
Servicios Bananeros S.A. - (Conserba or C.I. 12/15/92
Conserba)
Compana Agricola Diversificada, S.A. (Coagro) Guatemala
8/28/90
Compania de Desarrollo Bananero de Guatemala, Guatemala
S.A. (Bandegua) 12/04/72
Compania de Desarrollo Bananero del Ecuador S.A. Ecuador
(Bandecua) 11/28/78
Compania Industrial Corrugadora Guatemala, S.A. Guatemala
(Corrugadora) 02/13/67
Cordoba Shipping Corporation Cayman Islands
01/26/93
Corporacion de Desarrollo Agricola Del Monte S.A. Costa Rica
11/18/67
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Davao Agricultural Ventures Corporation (Davco) Philippines
6/26/81
Del Fresh Co., Ltd. (Del Fresh Kabushiki Kaisha) Japan
01/25/95
Del Monte B.V.I. Limited British Virgin Islands
10/05/89
Del Monte Fresh Fruit Company Ltd. (Japan) Japan
10/28/88
Del Monte Fresh Fruit Far East B.V. Netherlands
10/15/90
Del Monte Fresh Produce Acquisition (Chile) Corp. Cayman Islands
08/10/98
Del Monte Fresh Produce (Argentina) S.R.L. Argentina
06/25/98
Del Monte Fresh Produce (Asia-Pacific) Limited Hong Kong
07/07/89
Del Monte Fresh Produce B.V. Netherlands
09/13/89
Del Monte Fresh Produce (Belgium) N.V. Belgium
05/22/90
Del Monte Fresh Produce Brasil Ltda. Brazil
05/27/93
Del Monte Fresh Produce (Cameroon) SARL Cameroon
02/23/88
Del Monte Fresh Produce (Chile) S.A Chile
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
Del Monte Fresh Produce Company Delaware
12/13/85
Del Monte Fresh Produce (Florida) Inc. Florida
12/13/96
Del Monte Fresh Produce (Hawaii) Inc. Delaware
10/12/89
Del Monte Fresh Produce (HK) Limited [WITH
CHINESE EQUIVALENT] Hong Kong
04/02/97
Del Monte Fresh Produce (Holland) B.V. Netherlands
03/01/51
Del Monte Fresh Produce Inc. California
02/04/27
Del Monte Fresh Produce International Inc. Liberia
(DMFPI) 04/17/89
Del Monte Fresh Produce Investment (Chile) Corp. Cayman Islands
08/10/98
Del Monte Fresh Produce (Korea) Ltd. Korea
10/16/99
Del Monte Fresh Produce (Mexico) S.A. de C.V. Mexico
08/16/93
Del Monte Fresh Produce (Middle East) Corp. Cayman Islands
11/19/98
Del Monte Fresh Produce N.A., Inc. Florida
12/15/52
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
Del Monte Fresh Produce (New Zealand) Limited New Zealand
03/24/99
Del Monte Fresh Produce (Panama) S.A. Panama
01/29/98
Del Monte Fresh Produce (Peru) S.A. Peru
03/23/99
Del Monte Fresh Produce (Philippines), Inc. Philippines
10/17/89
Del Monte Fresh Produce (South Africa) (Pty) Ltd. South Africa
02/24/98
Del Monte Fresh Produce (Southeast) Inc. Delaware
08/07/98
Del Monte Fresh Produce (Southwest) Inc. Arizona
11/17/92
Del Monte Fresh Produce (UK) Ltd. England
08/23/89
Del Monte Fresh Produce (Uruguay) S.A. Uruguay
06/25/82
Del Monte Fresh Produce (West Coast), Inc. Delaware
03/08/89
Del Monte Grupo Comercial S.A. de C.V. Mexico
11/16/93
Del Pine Co., Ltd. (Del Pine Kabushiki Kaisha) Japan
08/05/93
DMFP Investment (Uruguay) Corp. Cayman Islands
09/14/98
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
El Genizaro S.A. Costa Rica
02/11/75
Envases Industriales de Costa Rica S.A. (Envaco) Costa Rica
10/25/60
Expocenter, S.A. Uruguay
09/09/90
Exportaciones Prococo, S.A. Costa Rica
05/12/89
FDM Holdings Cayman Islands, BWI
Limited 08/29/96
Floral Inc. Cayman Islands
11/20/98
Fresh Del Monte Japan Company Ltd. Japan
11/28/97
Fresh Del Monte Produce (Canada), Inc. Delaware
09/15/97
Fresh Del Monte Produce Inc. Cayman Islands, BWI
08/29/96
Fresh Del Monte Produce N.V. Netherlands Antilles
10/7/92
Fresh Del Monte Ship Holdings Ltd. Cayman Islands
09/03/98
Frigorifico Coquimbo S.A. Chile
05/08/84
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C>
Fruitrading Company Limited Liberia
01/05/99
Frutas de Parrita S.A. Costa Rica
07/29/86
Fundacion Fruitcola Ltda. Chile
11/05/92
G.L. van Gelderen (Vanfruit) B.V. Netherlands
06/17/74
Global Reefer Carriers, Ltd. Liberia
06/21/93
Granada Shipping Corporation Cayman Islands
10/11/91
Hacienda Filadelfia S.A. Costa Rica
05/04/65
Horn-Linie oHG Germany
Interfrucht Beteiligungsgesellschaft mbH Germany
03/10/92
Interfruit Brasil S.A. - (IBSA) Brazil
03/17/92
International Produce Trading Ltd. Liberia
10/02/92
Internationale Fruchtimport Gesellschaft Weichert & Co. Germany
01/31/52
Key Travel Services, Inc. Florida
02/27/63
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C>
Kunia Farms, Inc. Hawaii
05/31/94
Lerida Shipping Corporation Cayman Islands
06/11/98
Malaga Shipping Corporation Cayman Islands
07/16/97
Marbur Management Inc. Panama
01/07/86
Melones de Costa Rica S.A. Costa Rica
06/18/87
Melones del Pacifico S.A. Costa Rica
07/19/88
National Poultry PLC Jordan
02/19/94
Network Shipping Ltd. Bermuda
04/05/90
Neveka B.V. Netherlands
03/15/55
Pluto Shipping Corporation Liberia
12/12/75
Portuaria de Amatique, S.A. (Portama) Guatemala
08/28/90
Productora y Exportadora de Guatemala S.A. Guatemala
(Prexa) 04/23/91
Productos Especiales de Mexico, S.A. de C.V. Mexico
04/01/93
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C>
Rosy Acquisition, Inc. Delaware
06/10/99
Segovia Shipping Corporation Cayman Islands
11/16/99
Servicios Logisticos del Carmen, S.A. (Seldeca) Costa Rica
10/25/94
Sevilla Shipping Corporation Cayman Islands
03/09/93
Sociedad Agricola La Capilla Limitada Chile
06/11/86
Southern Stevedoring Co., Inc. Florida
08/08/58
Superstores B.V. Netherlands
01/09/73
Toledo Shipping Corporation Cayman Islands
03/09/93
Tricont Carriers, Ltd. Cayman Islands
02/23/88
United Investment Company Inmobiliaria S.A. Chile
("UIC")
United Plastic Corporation SA Chile
06/26/86
UTC Inmobiliaria S.A. Chile
07/02/96
Vega Fruit B.V. Netherlands
12/03/97
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
<S> <C>
Vega Marketing Holland (VmH) B.V. Netherlands
12/21/90
Wafer Limited Gibraltar
06/09/89
Westeuropa-Amerika-Linien GmbH Germany
("WAL") 03/17/52
</TABLE>
10
