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What changed in FRESH DEL MONTE PRODUCE INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FRESH DEL MONTE PRODUCE INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+378 added−373 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-22)

Top changes in FRESH DEL MONTE PRODUCE INC's 2023 10-K

378 paragraphs added · 373 removed · 294 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

86 edited+5 added−6 removed92 unchanged
Biggest changeWe actively support our customers through technical training in the handling of fresh produce, category management, in-store merchandising support, joint promotional activities, market research and inventory and other logistical support. The level of marketing investment necessary to support the prepared food business is significantly higher than that required for the fresh produce and fresh-cut fruit and vegetable business.
Biggest changeA key element of our sales and marketing strategy is to use our distribution centers and fresh-cut facilities to provide value-added services to our customers. We actively support our customers through technical training in the handling of fresh produce, category management, in-store merchandising support, joint promotional activities, market research, inventory and other logistical support.
We have leading market positions in the following product categories and we believe we are: • the largest marketer of fresh pineapples in the United States, and a leading marketer in other markets worldwide; • the third-largest marketer of bananas in the United States, and a leading marketer in other markets worldwide; • a leading marketer of: ◦ fresh-cut fruit in the United States, Canada, Japan, South Korea, and the United Kingdom; ◦ fresh-cut vegetables in North America, South Korea, Kuwait, United Arab Emirates, and Saudi Arabia; ◦ avocados in the United States; and ◦ canned fruit in Europe, Africa, and the Middle East.
We have leading market positions in the following product categories and we believe we are: • the largest marketer of fresh pineapples in the United States, and a leading marketer in other markets worldwide; • the third-largest marketer of bananas in the United States, and a leading marketer in other markets worldwide; and • a leading marketer of: ◦ fresh-cut fruit in the United States, Canada, Japan, South Korea, and the United Kingdom; ◦ fresh-cut vegetables in North America, South Korea, Kuwait, United Arab Emirates, Japan, and Saudi Arabia; ◦ avocados in the United States; and ◦ canned fruit in Europe, Africa, and the Middle East.
We believe that this trend should benefit large branded suppliers like us, who are better positioned to invest in state-of-the-art fresh-cut facilities and food safety systems and to service regional, national and global chains and foodservice operators, as well as supercenters, mass merchandisers, club stores and convenience stores.
We believe that this trend should benefit large branded suppliers like us, who are better positioned to invest in state-of-the-art fresh-cut facilities, food safety systems and to service regional, national and global chains and foodservice operators, as well as supercenters, mass merchandisers, club stores and convenience stores.
We are competitive with local practices; on average, we pay above minimum wage at our farms in Central America, Kenya, and the Philippines. Diversity and Inclusion We strive to foster a culture of diversity and inclusion (“D&I”) so all employees feel respected and no employee feels discriminated against.
We are competitive with local practices, and on average, we pay above minimum wage at our farms in Central America, Kenya, and the Philippines. Diversity and Inclusion We strive to foster a culture of diversity and inclusion (“D&I”) so all employees feel respected and no employee feels discriminated against.
We can also produce, market and distribute certain prepared food products in North America based on our agreement with Del Monte Pacific. The Del Monte ® brand has a reputation with both consumers and retailers for value, quality and reliability and is considered a premier brand in many Western European markets.
We can also produce, market and distribute certain prepared food products in North America based on our agreement with Del Monte Pacific Limited. The Del Monte ® brand has a reputation with both consumers and retailers for value, quality and reliability and is considered a premier brand in many Western European markets.
As part of our vertical integration and expansion strategy in this region, we developed a 10 hectare ultra-modern hydroponic greenhouse in Jordan to supply lettuce to our fresh-cut facilities, and where we also have a fresh-cut processing center for supplying lettuce to the Jordan market. We have one F&B store in this country.
As part of our vertical integration and expansion strategy in this region, we developed a 10-hectare ultra-modern hydroponic greenhouse in Jordan to supply lettuce to our fresh-cut facilities, and where we also have a fresh-cut processing center for supplying lettuce to the Jordan market. We have one F&B store in Jordan.
We also produce, distribute and market prepared fruits and vegetables, juices, beverages and snacks under the Del Monte ® brand, as well as other proprietary brands, such as Just Juice ® , Fruitini ® , Pinkglow ® , Del Monte Zero ™ , Honeyglow ® ,Honey Miniglow ® , Bananinis ® , and other regional trademarks in Europe, Africa and the Middle East.
We also produce, distribute and market prepared fruits and vegetables, juices, beverages and snacks under the Del Monte ® brand, as well as other proprietary brands, such as Just Juice ® , Fruitini ® , Pinkglow ® , Del Monte Zero ™ , Honeyglow ® , Rubyglow ® , Honey Miniglow ® , Bananinis ® , and other regional trademarks in Europe, Africa and the Middle East.
We make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and amendments to those materials filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), on our website under “Investor Relations - SEC Filings,” as soon as reasonably practicable after we file electronically such material with, or furnish it to, the United States Securities and Exchange Commission (the “Commission”).
We make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and amendments to those materials 13 Table of Contents filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), on our website under “Investor Relations - SEC Filings,” as soon as reasonably practicable after we file electronically such material with, or furnish it to, the United States Securities and Exchange Commission (the “Commission”).
Banana Bananas are the leading internationally traded fresh fruit in terms of volume and dollar sales and one of the best-selling fresh fruits in the United States. According to a 2022 publication by The Packer, bananas were the most popular item in the produce department, purchased by 63% of consumers in the U.S. over the past twelve months.
Banana Bananas are the leading internationally traded fresh fruit in terms of volume and dollar sales and one of the best-selling fresh fruits in the United States. According to a 2023 publication by The Packer, bananas were the most popular item in the produce department, purchased by 63% of consumers in the U.S. over the past twelve months.
According to a USDA report, the quantity of avocados available per person, a proxy for consumption, has tripled over the past two decades. Additionally, publications by The Packer over the most recent three years indicate that an average of approximately 26% of consumers in the U.S. purchased avocados over the same time period.
According to a USDA report, the quantity of avocados available per person, a proxy for consumption, has tripled over the past two decades. Additionally, publications by The Packer over the most recent three years indicate that an average of approximately 39% of consumers in the U.S. purchased avocados over the same time period.
However, we have now opened agencies in the U.S., Guatemala, Costa Rica, Ecuador and Peru to support the expansion of this business and better serve our customers, including by enabling better end-to-end solutions such as cold storage services at port locations and cross-docking services in addition to our ocean freight services.
We have opened agencies in the U.S., Guatemala, Costa Rica, Ecuador and Peru to support the expansion of this business and better serve our customers, including by enabling better end-to-end solutions such as cold storage services at port locations and cross-docking services in addition to our ocean freight services.
We purchase our vegetables for these purposes from independent growers principally in the United States and Mexico. Our purchase contracts for both fruit and vegetables are typically short-term and vary by produce item. Pineapples We believe that we are the leading marketer of fresh pineapples in the United States and a leading marketer worldwide based on internally generated data.
We purchase our vegetables from independent growers principally in the United States and Mexico. Our purchase contracts for both fruit and vegetables are typically short-term and vary by produce item. Pineapples We believe that we are the leading marketer of fresh pineapples in the United States and a leading marketer worldwide based on internally generated data.
In addition to under the Del Monte ® label, our prepared food products are also sold under the buyers’ own label for major retailers.
In addition to under the Del Monte ® label, our prepared food products are also sold under the buyers’ own private label for major retailers.
As a result, D&I help us meet the needs of our customers around the world. Engagement and Opportunities Evolving our culture to increase employee engagement and productivity is a primary focus of our strategic plan as we believe an engaged workforce leads to a more innovative, productive and profitable company.
As a result, D&I helps us meet the needs of our customers around the world. Engagement and Opportunities Evolving our culture to increase employee engagement and productivity is a primary focus of our strategic plan as we believe an engaged workforce leads to a more innovative, productive and profitable company.
Our net sales by region for the year 2022 are depicted in the chart below. We produce, source, distribute and market a broad array of fresh produce, primarily under the Del Monte ® brand, as well as under other proprietary brands, such as UTC ® and Rosy ® .
Our net sales by region for the year 2023 are depicted in the chart below. We produce, source, distribute and market a broad array of fresh produce, primarily under the Del Monte ® brand, as well as under other proprietary brands, such as UTC ® and Rosy ® .
Maintaining fresh produce at the appropriate temperature is an important factor in preventing premature ripening and optimizing product quality and freshness. Consistent with our reputation for high-quality fresh produce, we must preserve our fresh produce in a continuous temperature-controlled environment, from the harvest through its distribution.
Maintaining fresh produce at the appropriate temperature is an important factor in preventing premature ripening and optimizing product quality and freshness. Consistent with our reputation for high-quality fresh produce, we must preserve our fresh produce in a continuous temperature-controlled environment, from the harvest through to distribution.
However, the impact of seasonality on our financial results was atypical during fiscal year 2022, particularly in our banana segment, where current market conditions led to a more significant portion of our gross profit being generated in the second half of the year when compared with historical results.
The impact of seasonality on our financial results was atypical during fiscal year 2022, particularly in our banana segment, where market conditions led to a more significant portion of our gross profit being generated in the second half of the year when compared with historical results.
We believe the completed integration will allow us to leverage our existing distribution network and infrastructure to expand the market reach of our Mann Packing family of products, while enhancing our ability to better serve our combined customers and address consumers' needs for healthier foods.
We believe the completed integration will allow us to leverage our existing distribution network and infrastructure to expand the market reach of our Mann Packing family of products, while enhancing our ability to better serve our integrated customers and address consumers' needs for healthier foods.
We have an integrated logistics network, which includes land and sea transportation through a broad range of refrigerated environments in ships, port facilities, containers, trucks and warehouses. Our logistics system is supported by various information systems.
We have an integrated logistics network, which includes land and sea transportation through a broad range of refrigerated environments on ships, port facilities, containers, trucks and warehouses. Our logistics system is supported by various information systems.
Utilizing our extensive knowledge of this region, we plan to continue capitalizing on this opportunity with increased focus in these markets. Asia In 2022, 10% of our net sales were in Asia. We distribute our products in Asia through direct marketing and large distributors.
Utilizing our extensive knowledge of this region, we plan to continue capitalizing on this opportunity with increased focus in these markets. Asia In 2023, 10% of our net sales were in Asia. We distribute our products in Asia through direct marketing and large distributors.
We also obtain our supply of avocados from independent growers in the United States and Peru. Prepared Foods We have a royalty-free, perpetual license to use the Del Monte ® trademark in connection with the production, manufacture, sale and distribution of prepared food, including beverages, in over 100 countries throughout Europe, Africa, the Middle East and certain Central Asian countries.
We also obtain our supply of avocados from independent growers in the United States and Peru. 4 Table of Contents Prepared Foods We have a royalty-free, perpetual license to use the Del Monte ® trademark in connection with the production, manufacture, sale and distribution of prepared food, including beverages, in over 100 countries throughout Europe, Africa, the Middle East and certain Central Asian countries.
Our products are sourced from company-controlled operations and through supply contracts with independent producers. In 2022, 49% of the fresh produce we sold was grown on company-controlled farms and the remaining 51% was acquired primarily through supply contracts with independent growers.
Our products are sourced from company-controlled operations and through supply contracts with independent producers. In 2023, 49% of the fresh produce we sold was grown on company-controlled farms and the remaining 51% was acquired primarily through supply contracts with independent growers.
We operated 42 distribution centers globally, generally with cold storage and banana ripening facilities in our key markets worldwide, including the United States, Canada, South Korea, the United Arab Emirates, Saudi Arabia and Hong Kong.
We operated 38 distribution centers globally, generally with cold storage and banana ripening facilities in our key markets worldwide, including the United States, Canada, South Korea, the United Arab Emirates, Saudi Arabia and Hong Kong.
Accordingly, we monitor our independent growers to ensure that their produce will meet our agricultural and quality control standards, offer technical assistance on certain aspects of production and packing and, in some cases, manage the farms. The quality assurance process begins on the farms and continues as harvested products enter our packing facilities.
Accordingly, we monitor our independent growers to ensure that their produce will meet our agricultural and quality control standards, offer technical assistance on certain aspects of production and packing and, in some cases, manage the farms. The quality assurance process begins on the farms and continues as harvested 8 Table of Contents products enter our packing facilities.
In the pineapple category, we believe that the high degree of capital investment and cultivation expertise required, as well as the longer length of the growing cycle, makes it relatively difficult to enter the market. Our primary competitors in this category are 9 Table of Contents large multinational producers, as well as smaller exporters and importers.
In the pineapple category, we believe that the high degree of capital investment and cultivation expertise required, as well as the longer length of the growing cycle, makes it relatively difficult to enter the market. Our primary competitors in this category are large multinational producers, as well as smaller exporters and importers.
Although our supply contracts are primarily long-term, we also make purchases in the spot market, 5 Table of Contents primarily in Ecuador. In Ecuador and Costa Rica, there are minimum export prices for the sale of bananas which are established and reviewed on a periodic basis by the respective governments.
Although our supply contracts are primarily long-term, we also make purchases in the spot market, primarily in Ecuador. In Ecuador and Costa Rica, there are minimum export prices for the sale of bananas, which are established and reviewed on a periodic basis by the respective governments.
Our offerings in North America also include a broad variety of fresh and fresh-cut vegetable products since our acquisition of Mann Packing in 2018. During 2022, we completed our integration of Mann Packing, providing the business with full access to our North America resources and logistics network.
Our offerings in North America also include a broad variety of fresh and fresh-cut vegetable products since our acquisition of Mann Packing in 2018. During 2022, we completed our integration of Mann Packing, providing the business with full access to 3 Table of Contents our North America resources and logistics network.
In recent years, we have continued our efforts to diversify our product lines, including with the launch of our proprietary Pinkglow ® pineapple in 2020 and with the relaunch of our Honeyglow ® pineapple in 2021.
In recent years, we have continued our efforts to innovate our product lines, including with the launch of our proprietary Pinkglow ® pineapple in 2020 and with the relaunch of our Honeyglow ® pineapple in 2021.
During 2022, we continued our efforts in the area of avocado predictability, combining the use of artificial intelligence and our data library to develop technology that can predict avocado pricing. Our avocados are sourced principally from Mexico where we have our own sourcing operations and sorting and packing facility, ensuring a consistent supply of high-quality avocados year-round.
During 2022 and 2023, we continued our efforts in the area of avocado predictability, combining the use of artificial intelligence and our data library to develop technology that can help forecast avocado pricing. Our avocados are sourced principally from Mexico where we have our own sourcing operations and sorting and packing facility, ensuring a consistent supply of high-quality avocados year-round.
Other Products and Services Included in our other products and services segment is our third-party freight and logistic services business and our Jordanian poultry and meats business. Our third-party freight and logistic services business leverages our supply chain assets, including our shipping vessels, warehouses and cold storage infrastructure as part of our efforts to expand our portfolio of services.
Other Products and Services Included in our other products and services segment is our third-party freight and logistic services business and our Jordanian poultry and meats business. 5 Table of Contents Our third-party freight and logistic services business leverages our supply chain assets, including our shipping vessels, warehouses and cold storage infrastructure as part of our efforts to expand our portfolio of services.
Fresh and value-added products Our fresh and value-added products segment includes sales of the following product categories: Fresh-cut produce (fresh-cut fruit and fresh-cut vegetables) Our fresh-cut produce sales in 2022 represented 20% of our total net sales.
Fresh and value-added products Our fresh and value-added products segment includes sales of the following product categories: Fresh-cut produce (fresh-cut fruit and fresh-cut vegetables) Our fresh-cut produce sales in 2023 represented 20% of our total net sales.
We strive to expand this status by increasing our leading position in fresh-cut produce, expanding our fresh fruit and vegetable business, continuing to grow these value-added products and diversifying our other fresh produce selections. 2 Table of Contents Sourcing and Production A graphic depicting our geographic sales and sourcing operations is shown below.
We strive to expand this status by increasing our leading position in fresh-cut produce, expanding our fresh fruit and vegetable business, continuing to grow these value-added products and diversifying our other fresh produce selections. 2 Table of Contents Sourcing and Production A graphic depicting our geographic sales and sourcing operations as of the end of 2023 is shown below.
Some of the research and development projects include: • the development of the Del Monte Gold ® Extra Sweet pineapple and other pineapple and melon varieties, including our proprietary Pinkglow ® pineapple and the patented Vintage Ruby™ pineapple • improved irrigation methods and soil preparation for melon planting In addition, during fiscal 2021, we announced a partnership with Queensland University of Technology, located in Brisbane, Australia, to lead innovation toward the development of disease-resistant bananas.
Some of the research and development projects include: • the development of the Del Monte Gold ® Extra Sweet pineapple and other pineapple and melon varieties, including our proprietary Pinkglow ® pineapple and Rubyglow ® pineapple (patented as Vintage Ruby™); and • improved irrigation methods and soil preparation for melon planting 10 Table of Contents In addition, during fiscal 2021, we announced a partnership with Queensland University of Technology, located in Brisbane, Australia, to lead innovation toward the development of disease-resistant bananas.
We market and distribute our products to retail stores, club stores, convenience stores, wholesalers, distributors and foodservice operators in more than 80 countries around the world. North America is our largest market, accounting for 61% of our net sales in 2022. Our other major markets are Europe, the Middle East (which includes North Africa) and Asia.
We market and distribute our products to retail stores, club stores, convenience stores, wholesalers, distributors and foodservice operators in more than 80 countries around the world. North America is our largest market, accounting for 60% of our net sales in 2023. Our other major markets are Europe, the Middle East (which includes North Africa) and Asia.
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 10 Table of Contents would be material, except as described in Note 16, “ Commitments and Contingencies ” to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data.
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 in Note 16, “ Commitments and Contingencies ” to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data.
North America In 2022, 61% of our net sales were in North America where we have established a highly integrated sales and marketing network that builds on our ability to control transportation and distribution throughout our extensive logistics network. We operate a total of 27 distribution centers and fresh-cut facilities within North America.
North America In 2023, 60% of our net sales were in North America where we have established a highly integrated sales and marketing network that builds on our ability to control transportation and distribution throughout our extensive logistics network. We operate a total of 27 distribution centers and fresh-cut facilities within North America.
Our research and development programs have led to improvements in agricultural and growing practices, as well as product packaging and technology.
Research and Development and Intellectual Property Our research and development programs have led to improvements in agricultural and growing practices, as well as product packaging and technology.
These programs are directed mainly at reducing the cost and risk of pesticides, using natural biological agents to control pests and diseases, testing new varieties of our principal fruit varieties for improved crop yield and resistance to diseases, and improving post-harvest handling.
These programs are directed mainly at reducing the cost and risk of pesticides by fostering the use of natural biological agents to control pests and diseases, testing new varieties of our principal fruit varieties for improved crop yield and resistance to diseases, and improving post-harvest handling.
Workforce Governance Our Board of Directors currently oversees all human capital resources. Our Governance Committee currently oversees our policies and programs related to sustainability, risk management, corporate social responsibility and the environment. Additionally, our Compensation Committee is dedicated to carrying out incentive programs and working with our employees to 13 Table of Contents strategically align talent within the Company.
Workforce Governance Our Board of Directors currently oversees all human capital resources. Our Governance Committee currently oversees our policies and programs related to sustainability, risk management, cybersecurity oversight, corporate social responsibility and the environment. Additionally, our Compensation Committee is dedicated to carrying out incentive programs and working with our employees to strategically align talent within the Company.
In North America, we also produce and market an array of prepared vegetable offerings such as vegetable trays with dip, Nourish Bowls ® and most recently, ready-to-use veggie kits created for air fryers.
In North America, we also produce and market an array of prepared vegetable offerings such as vegetable trays with dip, salad kids, Nourish Bowls ®, and ready-to-use veggie kits created for air fryers.
We produce bananas on company-controlled farms in Costa Rica, Guatemala, the Philippines, Panama and Brazil, and we purchase bananas from independent growers in Guatemala, the Philippines, Ecuador, and Colombia. In 2022, we produced approximately 45% of the banana volume we sold on company-controlled farms, and we purchased the remainder from independent growers.
We produce bananas on company-controlled farms in Costa Rica, Guatemala, the Philippines, Panama and Brazil, and we purchase bananas from independent growers in Guatemala, the Philippines, Ecuador, and Colombia. In 2023, we produced approximately 47% of the banana volume we sold on company-controlled farms, and we purchased the remainder from independent growers.
The countries in which we market a material amount of our products are the United States, the countries of the EU, Japan, South Korea, and Saudi Arabia.
The countries in which we market a material amount of our products are the United States, the countries of the European Union (EU), the United Kingdom, Japan, South Korea, and Saudi Arabia.
We are an exempted holding company, incorporated under the laws of the Cayman Islands on August 29, 1996. At December 30, 2022, the close of our most recent fiscal year, members of the Abu-Ghazaleh family directly owned approximately 29.1% of our outstanding Ordinary Shares. Our principal executive office is located at P.O.
We are an exempted holding company, incorporated under the laws of the Cayman Islands on August 29, 1996. At December 29, 2023, the close of our most recent fiscal year, members of the Abu-Ghazaleh family directly owned approximately 28.6% of our outstanding Ordinary Shares. Our principal executive office is located at P.O.
In the prepared food markets in Europe, Africa, North America, and the Middle East, we compete with various local producers, large retailers with their BOL products, and large international branded companies. It is in the branded section that our prepared food products, specifically canned fruit and pineapple in many European countries, hold a leading market position.
In the prepared foods markets in Europe, Africa, North America, and the Middle East, we compete with various local producers, large retailers with their BOL products, and large international branded companies. We believe we hold a leading market position in the branded section of our prepared food products, specifically canned fruit and pineapple, in many European countries.
Our principal markets in this region are Japan, South Korea, mainland China and Hong Kong. 8 Table of Contents • In Japan, we distributed 100% of the products we sold in 2022 through our own direct sales and marketing organization and we operate three fresh-cut facilities.
Our principal markets in this region are Japan, South Korea, mainland China and Hong Kong. • In Japan, we distributed 100% of the products we sold in 2023 through our own direct sales and marketing organization and we operate three fresh-cut facilities.
Costa Rica is our most significant sourcing location representing approximately 35% of our total sales volume of fresh produce products and where 35% of our property, plant and equipment was located in 2022.
Costa Rica is our most significant sourcing location representing approximately 36% of our total sales volume of fresh produce products and where 36% of our property, plant and equipment was located in 2023.
In the Philippines, we have leased approximately 4,200 hectares of land where we have planted approximately 3,450 hectares of bananas for the Asia and the Middle East markets.
In the Philippines, we have leased approximately 4,000 hectares of land where we have planted approximately 3,055 hectares of bananas for the Asia and the Middle East markets.
We also service these customers, as well as an increasing number of smaller regional chains and independent grocers, through our distribution centers. 7 Table of Contents Europe In 2022, 17% of our net sales were in Europe where we distribute our fresh produce and prepared food products.
We also service these customers, as well as an increasing number of smaller regional chains and independent grocers, through our distribution centers. Europe In 2023, 19% of our net sales were in Europe where we distribute our fresh produce and prepared food products.
In the Philippines, we purchase the majority of our bananas through long-term contracts with independent growers. Approximately 75% of our Philippine-sourced bananas are supplied by one grower, representing 11% of the Philippines banana industry volume in 2022.
In the Philippines, we purchase the majority of our bananas through long-term contracts with independent growers. Approximately 84% of our Philippine-sourced bananas are supplied by one grower, representing 12% of the Philippines banana industry volume in 2023.
Information on our website is not a part of this Report on Form 10-K. Copies of our annual report may be obtained, free of charge, upon written request to Attention: Investor Relations, c/o Del Monte Fresh Produce Company, 241 Sevilla Avenue, Coral Gables, Florida 33134. The volume data included in this annual report has been obtained from our records.
Information on our website is not a part of this Report on Form 10-K. Copies of our annual report may be obtained, free of charge, upon written request to Attention: Investor Relations, c/o Del Monte Fresh Produce Company, 241 Sevilla Avenue, Coral Gables, Florida 33134.
We are proud of the diversity throughout our organization and especially in our leadership team, of which 59% identify as Hispanic, 33% identify as Middle Eastern, and 8% identify as Caucasian. We embrace diversity 12 Table of Contents throughout our company as we have employees across multiple generations and many different backgrounds.
We are proud of the diversity throughout our organization and especially in our leadership team, of which 62% identify as Hispanic, 31% identify as Middle Eastern, and 8% identify as Caucasian. We embrace diversity throughout our company as we have employees across multiple generations and many different backgrounds.
Given the complexity of pineapple cultivation relative to our bananas, a higher percentage of the fresh pineapples we sell (79% by volume in 2022) is produced on company-controlled farms. 4 Table of Contents Avocados Avocado net sales represented 7% of our total net sales during 2022. Avocados are one of the fastest growing produce items in the United States.
Given the complexity of pineapple cultivation relative to our bananas, a higher percentage of the fresh pineapples we sell (74% by volume in 2023) is produced on company-controlled farms. Avocados Avocado net sales represented 6% of our total net sales during 2023. Avocados are one of the fastest growing produce items in the United States.
Except as otherwise indicated, volume data contained in this Report is shown in millions of 40-pound equivalent boxes. 14 Table of Contents
Except as otherwise indicated, volume data contained in this Annual Report on Form 10-K is shown in millions of 40-pound equivalent boxes. 14 Table of Contents
Building upon our six refrigerated container vessels, which were delivered in 2020 and 2021, has allowed us to continue expanding this ancillary business, and has provided meaningful contribution to our profitability in 2022 which we expect to continue in future periods.
Our six refrigerated container vessels, which were delivered in 2020 and 2021, have allowed us to continue expanding this ancillary business, and provide meaningful contribution to our profitability in 2022 and 2023 which we expect to continue in future periods.
As of the year ended 2022, we transported our fresh produce to markets using our fleet of one chartered and twelve owned ships, and operated four port facilities in the United States.
As of the year ended 2023, we transported our fresh produce to markets using our fleet of two chartered and ten owned ships, and four port facilities in the United States.
We are also supporting innovations to enhance soils, crop yields and resiliency to strengthen our farmers’ livelihoods. Community Outreach In our communities around the world, we create more than just jobs; we increase access to healthcare and education, help develop infrastructure, contribute to reducing food insecurity and support resiliency and recovery when natural disasters occur.
Community Outreach In our communities around the world, we create more than just jobs; we help to increase access to healthcare and education, help develop infrastructure, contribute to reducing food insecurity and support resiliency and recovery when natural disasters occur.
We also sell fresh-cut products in Europe, Asia, and the Middle East. 3 Table of Contents We believe that the fresh-cut produce market continues to be one of the fastest-growing categories in the fresh produce industry, largely due to consumer trends favoring healthy, fresh and conveniently packaged ready-to-eat foods.
We believe that the fresh-cut produce market continues to be one of the fastest-growing categories in the fresh produce industry, largely due to consumer trends favoring healthy, fresh and conveniently packaged ready-to-eat foods.
Our pineapple net sales in 2022 represented 13% of our total net sales, and were primarily concentrated in North America (accounting for 60% of our total pineapple sales), followed by Europe (21%), Asia (13%), and the Middle East (6%).
Our pineapple net sales in 2023 represented 14% of our total net sales, and were primarily concentrated in North America (accounting for 61% of our total pineapple sales), followed by Europe (22%), Asia (11%), and the Middle East (6%).
In Saudi Arabia, through our 60%-owned joint venture, we owned two distribution centers as of December 30, 2022 with banana ripening, cold storage facilities, fresh-cut fruit, vegetable and salad operations, and prepared food manufacturing of frozen potatoes, ultra-fresh juices, and freshly prepared sandwiches.
In Saudi Arabia, through our 60%-owned joint venture, we lease two distribution centers with fresh-cut fruit, vegetable and salad operations, and prepared foods manufacturing of frozen potatoes, ultra-fresh juices, and freshly prepared sandwiches.
Our banana net sales in 2022 represented 37% of our total net sales, and were primarily concentrated in North America (accounting for 51% of our total banana sales), followed by Europe (21%), Asia (18%), and the Middle East (9%).
Our banana net sales in 2023 represented 38% of our total net sales, and were primarily concentrated in North America (accounting for 49% of our total banana sales), followed by Europe (23%), Asia (18%), and the Middle East (8%).
Our ability to off-load shipments for cold storage and distribution throughout our network also improves ship utilization by minimizing in-port docking time.
This allows us to manage the timing of our sales to optimize our margins. Our ability to off-load shipments for cold storage and distribution throughout our network also improves ship utilization by minimizing in-port docking time.
Additionally, in early 2023 we announced a multi-year collaboration agreement with a UAE-based firm to launch banana operations in Somalia for purposes of supplying our Middle East and North Africa markets beginning in 2024. During the late 1980s and early 1990s, Somalia was a main hub for banana exports to these regions.
Additionally, in early 2023 we announced a multi-year collaboration agreement with a United Arab Emirates-based ("UAE") firm to supply our Middle East and North Africa markets with bananas grown in Somalia, which is expected to begin in 2025. During the late 1980s and early 1990s, Somalia was a main hub for banana exports to these regions.
We also transport our products to destinations around the world using third-party container lines that cover destinations that we do not service directly with our own fleet. Included in our twelve owned ships are the six refrigerated container ships that we received in 2020 and 2021.
We transport our fresh produce using our fleet of two chartered refrigerated ships and ten owned ships and also transport our products to destinations around the world using third-party container lines that cover destinations that we do not service directly with our own fleet.
In order to reduce our costs and increase our competitiveness in the prepared foods business, particularly in Europe, we use distributors in certain key European markets to perform product distribution and sales and marketing activities. Under these arrangements, the sales, warehousing, logistics, marketing and promotion functions are all performed by the distributor.
In order to reduce our costs and increase our competitiveness in the prepared foods market, particularly in Europe, we use distributors in certain key European markets to perform product distribution and sales and marketing activities.
These sales are reported in our banana and fresh and value-added products segments. No customer accounted for 10% or more of our net sales in 2022. In 2022, our top 10 customers accounted for approximately 29% of our net sales.
During 2023, one customer, Walmart, Inc. (including its affiliates), accounted for approximately 9% of our total net sales. These sales are reported in our banana and fresh and value-added products segments. No customer accounted for 10% or more of our net sales in 2023. In 2023, our top 10 customers accounted for approximately 31% of our net sales.
Government Regulation As a producer and distributor of food products, we are subject to extensive government laws and regulations in the jurisdictions where our produce is grown, where our facilities are located and where our products are distributed.
Under these arrangements, the sales, warehousing, logistics, marketing and promotion functions are all performed by the distributor. 9 Table of Contents Government Regulation As a producer and distributor of food products, we are subject to extensive government laws and regulations in the jurisdictions where our produce is grown, where our facilities are located and where our products are distributed.
Our current workforce is comprised of approximately 6,920 full-time, salaried employees and 22,248 full-time, hourly employees. Additionally, we employ over 10,900 seasonal, hourly employees, who enable us to pack our in-season fruits and vegetables. Approximately 80% of our workforce is employed in production locations.
Our current workforce is comprised of approximately 6,402 full-time, salaried employees and 25,485 full-time, hourly employees. Additionally, as of December 29, 2023, we employed over 7,000 seasonal, hourly employees, who enable us to pack our in-season fruits and vegetables. Approximately 81% of our workforce is employed in production locations.
Our employees are supported with training and development opportunities to pursue their careers and support compliance with our policies. We also utilize a centralized employee intranet to reach out to employees and allow them to stay connected, remain informed and communicate their thoughts and values. Health We support the health and well-being of our employees by offering health care benefits.
We also utilize a centralized employee intranet to reach out to employees and allow them to stay connected, remain informed and communicate their thoughts and values. 12 Table of Contents Health We support the health and well-being of our employees by offering health care benefits. While these benefits vary across our different regions, we are competitive with local practices.
These fuel-efficient vessels have allowed us to continue generating logistics cost savings, expanding our third-party ocean freight business, and ensuring the freshness and quality of our products. We also operate a fleet of approximately 11,000 refrigerated containers. We believe that our control of the logistics process is a competitive advantage, including from a sales and marketing perspective.
Included in our ten owned ships are six refrigerated container ships that we received in 2020 and 2021. These fuel-efficient vessels have allowed us to continue generating logistics cost savings, expanding our third-party ocean freight business, and ensuring the freshness and quality of our products. We also operate a fleet of approximately 11,000 refrigerated containers.
For example, because we are able to maintain the quality of our fresh produce in a continuous temperature-controlled environment, we are under less pressure to fully sell a shipment prior to its arrival at port. This allows us to manage the timing of our sales to optimize our margins.
We believe that our control of the logistics process is a competitive advantage, including from a sales and marketing perspective. For example, because we are able to maintain the quality of our fresh produce in a continuous temperature-controlled environment, we are under less pressure to fully sell a shipment prior to its arrival at port.
In addition, our logistics network enables us to continuously monitor and maintain the quality of our produce, ensure timely and regular distribution to customers on a year-round basis, and manage our inventory among distribution centers, as needed, to effectively respond to changes in market demand.
In addition, our logistics network enables us to continuously monitor and maintain the quality of our produce, ensure timely and regular distribution to customers on a year-round basis, and manage our inventory among distribution centers, as needed, to effectively respond to changes in market demand. 6 Table of Contents Sales and Marketing The Del Monte ® brand has been used to identify premium produce products for over 125 years and is recognized by consumers worldwide for quality, freshness and reliability.
Our prepared food activity in Germany and France has been performed via direct sales to the retail channel through our own sales and marketing entity. Middle East and North Africa In 2022, 10% of our net sales were in the Middle East and North Africa. In this region, we distribute our products through independent distributors and company-operated distribution facilities.
Our prepared foods activity in Germany and France has been performed via direct sales to the retail channel through our own sales and marketing entity. 7 Table of Contents Middle East and North Africa In 2023, 9% of our net sales were in the Middle East and North Africa.
Year ended December 30, 2022 December 31, 2021 Net sales: First quarter $ 1,136.9 $ 1,088.3 Second quarter 1,211.9 1,141.6 Third quarter 1,053.5 1,004.8 Fourth quarter 1,040.0 1,017.3 Total $ 4,442.3 $ 4,252.0 Gross profit: First quarter $ 89.8 $ 105.0 Second quarter 80.7 110.0 Third quarter 88.0 48.9 Fourth quarter 81.7 39.8 Total* $ 340.2 $ 303.8 *Due to rounding, the sum of the quarterly amounts may not equal the reported amounts for the full year.
Our results in 2023 were consistent with historical trends. 11 Table of Contents Year ended December 29, 2023 December 30, 2022 Net sales: First quarter $ 1,128.5 $ 1,136.9 Second quarter 1,180.5 1,211.9 Third quarter 1,003.1 1,053.5 Fourth quarter 1,008.6 1,040.0 Total $ 4,320.7 $ 4,442.3 Gross profit: First quarter $ 97.0 $ 89.8 Second quarter 116.8 80.7 Third quarter 74.4 88.0 Fourth quarter 62.5 81.7 Total* $ 350.7 $ 340.2 *Due to rounding, the sum of the quarterly amounts may not equal the reported amounts for the full year.
Our leased distribution and manufacturing center in Dubai, United Arab Emirates (“UAE”) has just-in-time delivery capabilities and includes fresh-cut fruit and vegetable operations, an ultra-fresh juice manufacturing operation and prepared food distribution.
In this region, we distribute our products through independent distributors and company-operated distribution facilities. Our leased distribution and manufacturing center in Dubai, UAE has just-in-time delivery capabilities and includes fresh-cut fruit and vegetable operations, an ultra-fresh juice manufacturing operation and prepared foods distribution.
Under these distribution agreements, the sales, warehousing, logistics, marketing and promotion functions are all performed by the distributor. This strategy of utilizing independent distributors enables us to reduce distribution, sales and marketing expenses while allowing us to penetrate additional markets. During 2022, one customer, Walmart, Inc. (including its affiliates), accounted for approximately 8% of our total net sales.
In certain European markets, we use distributors to perform product distribution, sales and marketing activities for the prepared foods business. Under these distribution agreements, the sales, warehousing, logistics, marketing and promotion functions are all performed by the distributor. This strategy of utilizing independent distributors enables us to reduce distribution, sales and marketing expenses while allowing us to penetrate additional markets.
This new pineapple variety, which we expect to launch in North America and select European markets in 2023, is grown in Costa Rica and has been certified as sustainably grown by a third-party certification body. Pineapples are grown in tropical and sub-tropical locations. The principal production and procurement areas for our pineapples are Costa Rica, the Philippines, and Kenya.
This new pineapple product line extension, which launched in North America and select European markets in 2023, is grown in Costa Rica and has been certified as sustainably grown by a third-party certification body.
In the UAE and in Saudi Arabia, we also distribute our products using our own innovative retail concept through our Food and Beverage (F&B) stores. These F&B stores are small retail kiosks selling our fresh-cut produce, juice and other prepared food products and are strategically located in airports, schools, hospitals and inside hyper-markets.
These F&B stores are small retail kiosks selling our fresh-cut produce, juice and other prepared food products and are strategically located in airports, schools, hospitals and inside hyper-markets. In Jordan, we own a vertically integrated poultry business including poultry farms, hatcheries, a feed mill, a slaughterhouse and a meat processing plant.
We also sell products under the Mann Packing family of brands including Mann ™ , Mann's Logo ™ , Arcadian Harvest ® , Nourish Bowls ® , Broccolini ® , Caulilini ® , Better Burger Leaf ® and Romaleaf ® . 11 Table of Contents Seasonality Due to seasonal sales price fluctuations, we have historically realized a greater portion of our net sales and of our gross profit during the first two calendar quarters of the year.
Seasonality Due to seasonal sales price fluctuations, we have historically realized a greater portion of our net sales and of our gross profit during the first two calendar quarters of the year.
We also support many local organizations and initiatives that promote healthy and active lifestyles, and sponsor local sports teams and organizations throughout our regions. Safety We are committed to building a culture of safety with the goal of zero incidents.
We take a proactive approach to the health and well-being of our communities by contributing to the development of health services and infrastructure. We also support many local organizations and initiatives that promote healthy and active lifestyles, and sponsor local sports teams and organizations throughout our regions.
We use a variety of promotional tools to build the Del Monte® brand and engage consumers in key markets in Europe, Africa and the Middle East. In certain European markets, we use distributors to perform product distribution, sales and marketing activities for the prepared food business.
The level of marketing investment necessary to support the prepared foods business is significantly higher than that required for the fresh produce and fresh-cut fruit and vegetable business. We use a variety of promotional tools to build the Del Monte® brand and engage consumers in key markets in Europe, Africa and the Middle East.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWater is vital to grow the fresh produce that our business relies on. In recent years, water deficits in certain regions have become more evident. In Brazil, water shortages negatively impacted our banana production recently, and our pineapple farms in Kenya were affected by a drought linked to El Nino during 2016, 2017, and 2019.
Biggest changeIn Brazil, water shortages have previously negatively impacted our banana production, and our pineapple farms in Kenya were affected by a drought linked to El Nino during 2016, 2017, and 2019. To mitigate water risks, we have invested heavily to upgrade existing infrastructure to more efficient irrigation systems like drip or low pressure/low volume sprinkler systems in Kenya and Guatemala.
For example, the FDA issued a final rule on additional traceability recordkeeping requirements, which will be effective January 20, 2026, designed to facilitate faster identification and rapid removal of potentially contaminated food from the market; • Regulations on imports and exports by the United States Department of Agriculture (the “USDA”); • Food and safety laws issued by European Union Member States, pursuant to the General Food Law Regulation (EC No. 178/2002); • Laws and regulations associated with the European Green Deal and EU’s General Food Law Regulation effort to create sustainable food systems, which could result in increased costs for our business associated with compliance with new laws and regulations; and • Laws and regulations implemented by the Canadian Food Inspection Agency and other Canadian governmental departments, which could disrupt our Canadian business, including, for example, requirements relating to import licenses, traceability and food testing.
For example, the FDA issued a final rule on additional traceability recordkeeping requirements, which will be effective January 20, 2026, designed to facilitate faster identification and rapid removal of potentially contaminated food from the market; • Regulations on imports and exports by the United States Department of Agriculture (the “USDA”); • Food and safety laws issued by member states of the European Union (the "EU"), pursuant to the General Food Law Regulation (EC No. 178/2002); • Laws and regulations associated with the European Green Deal and EU’s General Food Law Regulation effort to create sustainable food systems, which could result in increased costs for our business associated with compliance with new laws and regulations; and • Laws and regulations implemented by the Canadian Food Inspection Agency and other Canadian governmental departments, which could disrupt our Canadian business, including, for example, requirements relating to import licenses, traceability and food testing.
Our profitability depends on the profit margins and sale volumes of bananas, pineapples and other fresh produce. Market prices of bananas, pineapples and other fresh produce are volatile and difficult to predict because they are affected by various factors, including their availability and quality in the marketplace, imbalances of supply and demand and import regulations.
Our profitability depends on the profit margins and sale volumes of bananas, pineapples, avocados and other fresh produce. Market prices of bananas, pineapples, avocados and other fresh produce are volatile and difficult to predict because they are affected by various factors, including their availability and quality in the marketplace, imbalances of supply and demand and import regulations.
Furthermore, we may not be able to offset any cost increases through productivity initiatives or through our commodity hedging activity. Our profit margins for many of our products, including bananas, pineapples and other fresh produce, are volatile and we may not be able to increase prices to address cost increases.
Furthermore, we may not be able to offset any cost increases through productivity initiatives or through our commodity hedging activity. Our profit margins for many of our products, including bananas, pineapples, avocados and other fresh produce, are volatile and we may not be able to increase prices to address cost increases.
There is no assurance that we will continue to compete effectively with our present and future competitors. Consolidation of retailers, wholesalers and distributors in the food industry may result in downward pressure on sales prices. In the past twenty years, the food industry in the United States and in many international markets has significantly consolidated.
There is no assurance that we will continue to compete effectively with our present and future competitors. Consolidation of retailers, wholesalers and distributors in the food industry may result in downward pressure on sales prices. The food industry in the United States and in many international markets has significantly consolidated in the past twenty years and continues to consolidate.
We also contract with third parties to conduct certain fulfillment processes and operations on our behalf or to sell our product in a retail environment. Any failure by such third party to adequately store, maintain or transport perishable foods could negative impact the safety, quality and merchantability of our products and the experience of our customers.
We also contract with third parties to conduct certain fulfillment processes and operations on our behalf or to sell our product in a retail environment. Any failure by such third party to adequately store, maintain or transport perishable foods could negatively impact the safety, quality and merchantability of our products and the experience of our customers.
The prepared food markets are mature markets characterized by high levels of competition and consumer awareness. In addition, our profitability has depended significantly on the sale of our Del Monte Gold ® Extra Sweet pineapples. Increased competition in the production and sale of Del Monte Gold ® Extra Sweet pineapples or our other product categories could adversely affect our results.
The prepared foods markets are mature markets characterized by high levels of competition and consumer awareness. In addition, our profitability has depended significantly on the sale of our Del Monte Gold ® Extra Sweet pineapples. Increased competition in the production and sale of Del Monte Gold ® Extra Sweet pineapples or our other product categories could adversely affect our results.
These provisions include: • a classified board of directors; • a prohibition on shareholder action through written consents; • a requirement that general meetings of shareholders be called only by a majority of the Board or by the Chairman of the Board; • advance notice requirements for shareholder proposals and nominations; • limitations on the ability of shareholders to amend, alter or repeal our organizational documents; and • the authority of the Board to issue preferred shares on such terms that are determined by the Board itself.
These provisions include: 27 Table of Contents • a classified board of directors; • a prohibition on shareholder action through written consents; • a requirement that general meetings of shareholders be called only by a majority of the Board or by the Chairman of the Board; • advance notice requirements for shareholder proposals and nominations; • limitations on the ability of shareholders to amend, alter or repeal our organizational documents; and • the authority of the Board to issue preferred shares on such terms that are determined by the Board itself.
Any damage by unforeseen events or system failure which causes interruptions to the input, retrieval and transmission of data or increase in the service time, whether caused by human error, natural disasters, power loss, computer viruses, intentional acts of vandalism, various forms of cybercrimes including and not limited to hacking, ransomware, intrusions and malware or otherwise, could disrupt our normal operations.
Any damage by unforeseen events or system failure which causes interruptions to the input, retrieval and transmission of data or increase in the service time, whether caused by human error, natural disasters, power loss, computer viruses, intentional acts of vandalism, various forms of cybercrimes including and not limited to hacking, ransomware, 25 Table of Contents intrusions and malware or otherwise, could disrupt our normal operations.
Even when not merited, these class action claims and legal actions can be expensive to defend and could adversely affect our reputation, brand image, business and operating results. The packaging and labeling of our products, and their distribution and marketing, are also subject to regulation by governmental authorities in each jurisdiction where our products are marketed.
Even when not merited, these class action claims and legal actions can be expensive to defend and could adversely affect our reputation, brand image, business and operating results. 22 Table of Contents The packaging and labeling of our products, and their distribution and marketing, are also subject to regulation by governmental authorities in each jurisdiction where our products are marketed.
Our business is multinational and subject to the political, economic and other risks that are inherent in operating in numerous countries, including: • a change in laws and regulations or imposition of currency restrictions and other restraints; • the imposition of import and export duties and quotas; • the risk that the government may expropriate assets; • the imposition of burdensome tariffs and quotas; • political changes and economic crises that may lead to changes in the business environment where we operate; • international conflicts and terrorist acts, which could impact our business, financial condition and results of operations; • public health epidemics, such as COVID-19, which could impact employees and the global economy; • economic sanctions, which could disrupt our products, even if we do not sell directly into a sanctioned country; • potential violations or alleged violations of laws, regulations, safety codes, employment practices, human rights standards, anti-corruptions laws and other obligations, norms and ethical standards associated with our operations that may result in litigation costs and damage to our reputation, even if we are ultimately not found responsible; • changes in governmental agricultural policies such as price supports and acreage set aside programs in the jurisdictions where we conduct our significant growing operations; and • economic downturns, political instability and war or civil disturbances that may disrupt our, our third-party suppliers' and our customers' production and distribution logistics or limit sales in individual markets.
Our business is multinational and subject to the political, economic and other risks that are inherent in operating in numerous countries, including: • a change in laws and regulations or imposition of currency restrictions and other restraints; • the imposition of import and export duties and quotas; • the risk that the government may expropriate assets; • the imposition of burdensome tariffs and quotas; • political changes and economic crises that may lead to changes in the business environment where we operate; • international conflicts and terrorist acts, which could impact our business, financial condition and results of operations; • potential criminal activities targeting our employees, property or business activities, such as theft, vandalism, or physical attacks; • public health epidemics, such as COVID-19, which could impact employees and the global economy; • economic sanctions, which could disrupt our products, even if we do not sell directly into a sanctioned country; • potential violations or alleged violations of laws, regulations, safety codes, employment practices, human rights standards, anti-corruptions laws and other obligations, norms and ethical standards associated with our operations that may result in litigation costs and damage to our reputation, even if we are ultimately not found responsible; • changes in governmental agricultural policies such as price supports and acreage set aside programs in the jurisdictions where we conduct our significant growing operations; and • economic downturns, political instability, boycotts and war or civil disturbances that may disrupt our, our third-party suppliers' and our customers' production and distribution logistics or limit sales in individual markets.
A long-term reduction in the supply of bananas could lead to increased costs, decreased revenue, and charges to earnings that may adversely affect our business, financial condition and results of operations. 23 Table of Contents Adverse weather, natural disasters and other conditions affecting the environment, including the effects of climate change, could result in substantial losses and weaken our financial condition.
A long-term reduction in the supply of bananas could lead to increased costs, decreased revenue, and charges to earnings that may adversely affect our business, financial condition and results of operations. Adverse weather, natural disasters and other conditions affecting the environment, including the effects of climate change, could result in substantial losses and weaken our financial condition.
We remain concerned that these crop diseases could affect Southeast Asia and other growing regions like Latin America, which could lead to the destruction of all or a portion of the banana crops. We are working with agricultural experts and qualified agencies to monitor and prevent the spread of TR4 and develop contingency plans.
We remain concerned that these crop diseases could affect Southeast Asia and other growing regions like Latin America, which could lead to the destruction of all or a portion of the banana crops. 23 Table of Contents We are working with agricultural experts and qualified agencies to monitor and prevent the spread of TR4 and develop contingency plans.
Additionally, we record impairments on long-lived assets, including definite-lived intangible assets, when indicators of impairment are present and the estimated undiscounted cash flows of those assets are less than the assets’ carrying amount. Certain definite-lived intangible assets related to our fresh and value-added products segment are sensitive to changes in estimated cash flows.
Additionally, we record impairments on 19 Table of Contents long-lived assets, including definite-lived intangible assets, when indicators of impairment are present and the estimated undiscounted cash flows of those assets are less than the assets’ carrying amount. Certain definite-lived intangible assets related to our fresh and value-added products segment are sensitive to changes in estimated cash flows.
More recently, in August 2021, the EPA released a final rule revoking all tolerances for chlorpyrifos, a pesticide that has been used since 1965 in both agricultural and non-agricultural areas.
In August 2021, the EPA released a final rule revoking all tolerances for chlorpyrifos, a pesticide that has been used since 1965 in both agricultural and non-agricultural areas.
A failure to comply with labeling requirements in any of the jurisdictions in which we do business could result in enforcement proceedings, an order barring the sale of part or all of a 22 Table of Contents particular shipment of our products or, possibly, the sale of any of our products for a specified period.
A failure to comply with labeling requirements in any of the jurisdictions in which we do business could result in enforcement proceedings, an order barring the sale of part or all of a particular shipment of our products or, possibly, the sale of any of our products for a specified period.
Our ability to obtain additional debt financing or refinance our debt on acceptable terms, if at all, in the future for working capital, capital expenditures or acquisitions may be limited by financial considerations or due to covenants in existing debt 26 Table of Contents agreements. Our current credit facility imposes certain operating and financial restrictions on us.
Our ability to obtain additional debt financing or refinance our debt on acceptable terms, if at all, in the future for working capital, capital expenditures or acquisitions may be limited by financial considerations or due to covenants in existing debt agreements. Our current credit facility imposes certain operating and financial restrictions on us.
We depend on independent growers and key suppliers to obtain products and raw materials. In the Philippines, we purchase most of our bananas through long-term contracts with independent growers. Approximately 14% of our banana net sales in 2022 were supplied by one grower in the Philippines. Termination of our relationships with our key suppliers could adversely affect our business.
We depend on independent growers and key suppliers to obtain products and raw materials. In the Philippines, we purchase most of our bananas through long-term contracts with independent growers. Approximately 13% of our banana net sales in 2023 were supplied by one grower in the Philippines. Termination of our relationships with our key suppliers could adversely affect our business.
For example, in connection with a current examination of the tax returns in two of these foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $160.2 million (including interest and penalties) for tax years 2012 through 2016.
For example, in connection with a current examination of the tax returns in two of these foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $165.4 million (including interest and penalties) for tax years 2012 through 2016.
Moreover, actual or anticipated attacks may require us to incur incremental costs to hire additional personnel, purchase additional protection technologies, replace existing software and hardware, train employees and engage third-party experts and consultants, which could negatively impact our operating income.
Moreover, actual or anticipated attacks may require us to incur incremental costs to hire additional personnel, purchase additional protection technologies, maintain cyber incident insurance, replace existing software and hardware, train employees and engage third-party experts and consultants, which could negatively impact our operating income.
If we do not allocate and effectively manage the resources necessary to build, sustain and protect appropriate information technology systems and infrastructure, or we do not effectively implement system upgrades or oversee third-party service providers, our business or financial results could be negatively impacted.
If we do not allocate and effectively manage the resources necessary to build, sustain and protect appropriate information technology systems and infrastructure, or we do not 26 Table of Contents effectively implement system upgrades or oversee third-party service providers, our business or financial results could be negatively impacted.
These laws and regulations 21 Table of Contents provide for substantial fines, as well as criminal and civil penalties, in the event of any violations of, or non-compliance with, their requirements.
These laws and regulations provide for substantial fines, as well as criminal and civil penalties, in the event of any violations of, or non-compliance with, their requirements.
Consequently, our results of operations, as expressed in U.S. dollars, may vary significantly because of fluctuations in currency exchange rates. Such disparities are particularly crucial to our business because we incur a significant portion of our costs and our net sales in foreign currencies (nearly 28% of our sales in 2022).
Consequently, our results of operations, as expressed in U.S. dollars, may vary significantly because of fluctuations in currency exchange rates. Such disparities are particularly crucial to our business because we incur a significant portion of our costs and our net sales in foreign currencies (nearly 34% of our sales in fiscal 2023).
In the future, we may be forced to utilize GMO or gene-edited products in response to adverse market conditions, including disease, climate change or rising costs, if such 17 Table of Contents products are the only viable alternatives.
In the future, we may be forced to utilize GMO or gene-edited products in response to adverse market conditions, including disease, climate change or rising costs, if such products are the only viable alternatives.
While the investigation of this incident is still ongoing, we were able to recover our critical operational data and business systems promptly and do not expect the incident to have a material impact on our financial results. However, there is no guarantee that we will have similar success with an attack in the future should one occur.
We were able to recover our critical operational data and business systems promptly and do not expect the incident to have a material impact on our financial results. However, there is no guarantee that we will have similar success with an attack in the future should one occur.
If our banana and prepared foods reporting units do not perform as expected, the goodwill and other intangible assets associated with these reporting units may be at risk of impairment in the future.
If these reporting units do not perform as expected, the goodwill and other intangible assets associated with these reporting units may be at risk of impairment in the future.
For example, as a result of Tropical Race 4 (“TR4”) spreading into new growing regions, we may need to deploy GMO or gene-edited bananas resistant to the disease to maintain a viable supply of bananas to our key markets.
For example, as a result of TR4 spreading into new growing regions, we may need to deploy GMO or gene-edited bananas resistant to the disease to maintain a viable supply of bananas to our key markets.
Damage or disruption to raw material supplies or our manufacturing or distribution capabilities due to weather, climate change, natural disaster, fire, cyber-attacks, pandemics (such as the COVID-19 pandemic), governmental restrictions, strikes, import/export restrictions, or other factors could impair our ability to produce and sell our products.
Damage or disruption to raw material supplies or our manufacturing or distribution capabilities due to weather, climate change, natural disaster, fire, cyber-attacks, pandemics (such as the COVID-19 pandemic), regulatory changes, governmental restrictions, strikes, import/export restrictions, regulatory changes, civil unrest, war, international conflict or other factors could impair our ability to produce and sell our products.
Sales to Walmart, Inc., our largest customer, amounted to approximately 8% of our total net sales in fiscal 2022, and our top 10 customers collectively accounted for approximately 29% of our total net sales. We expect that a significant portion of our revenues will continue to be derived from a small number of customers.
Sales to Walmart, Inc., our largest customer, amounted to approximately 9% of our total net sales in fiscal 2023, and our top 10 customers collectively accounted for approximately 31% of our total net sales. We expect that a significant portion of our revenues will continue to be derived from a small number of customers.
If we are unable to successfully develop and integrate the diversified product lines in our fresh-cut and value-added vegetable categories, we may not realize all the anticipated synergies and benefits of our Mann Packing investments which could have an adverse effect on our growth and our results of operations.
If we are unable to successfully develop and integrate the diversified product lines in our fresh-cut and value-added vegetable categories or if demand for these products does not meet expectations, we may not realize all the anticipated synergies and benefits of our Mann Packing investments which could have an adverse effect on our growth and our results of operations.
Based on their increased size, these entities (i) can exert significant downward pricing pressure on marketers and/or distributors, such as us, which inhibits our ability to adequately respond to inflationary changes, (ii) can impose additional costs on us that are the type typically borne by the grocer and (iii) have the ability to launch private label food products that compete with us.
Based on their increased size and buying leverage as a result of consolidation, these entities (i) can exert significant downward pricing pressure on marketers and/or distributors, such as us, which inhibits our ability to adequately respond to inflationary changes, (ii) can impose additional costs on us that are the type typically borne by the retailer, wholesaler or distributor and (iii) have the ability to launch private label food products that compete with us.
Our inability to maintain favorable relationships with these entities could result in labor disputes, including work stoppages, which could have a material adverse effect on the portion of our business affected by the dispute, our financial position, and our results of operations.
Our inability to maintain favorable relationships with these entities could result in labor disputes, including work stoppages, which could have a material adverse effect on the portion of our business affected by the dispute, our financial position, and our results of operations. We are dependent on our relationships with key suppliers to obtain a number of our products.
Higher product prices may result in reductions in sales volume. Consumers may be less willing to pay a price differential for our branded products and may increasingly purchase lower-priced offerings, or may forgo some purchases altogether, during an economic downturn.
Increased product prices may result in reductions in sales volume if consumers are less willing to pay a price differential for our branded products and instead elect to purchase lower-priced offerings or forgo some purchases altogether, during an economic downturn.
Certain environmental laws, including the Comprehensive Environmental Response, Compensation and Liability Act in the U.S., impose strict and, in many cases, joint and several, liability for the cost of remediating contamination, on current and former owners of property or on persons responsible for causing such contamination, which could have an adverse effect on our business, financial condition and results of operations. 24 Table of Contents Water scarcity in our growing regions could adversely affect our agricultural operations, financial condition, results of operations and cash flows.
Certain environmental laws, including the Comprehensive Environmental Response, Compensation and Liability Act in the U.S., impose strict and, in many cases, joint and several, liability for the cost of remediating contamination, on current and former owners of property or on persons responsible for causing such contamination, which could have an adverse effect on our business, financial condition and results of operations.
We have significant labor-related expenses, including employee health benefits. Our ability to control our employee and related labor costs is generally subject to numerous external factors, including prevailing wage rates and new or revised employment and labor regulations including changes in immigration laws in the U.S. and other key production countries.
Our ability to control our employee and related labor costs is generally subject to numerous external factors, including shortages of qualified labor, prevailing wage rates and new or revised employment and labor regulations including changes in immigration laws in the U.S. and other key production countries.
Violations of these laws and regulations can result in substantial fines or penalties. There is no assurance that these modifications and improvements and any fines or penalties would not have an adverse effect on our business, financial condition and results of operations.
There is no assurance that these modifications and improvements and any fines or penalties would not have an adverse effect on our business, financial condition and results of operations.
The bananas, pineapples, and other fresh produce and value-added products markets are highly competitive, and the effect of competition is intensified because most of our products are perishable.
Our industry is highly competitive, which could adversely affect our profitability. The bananas, pineapples, and other fresh produce and value-added products markets are highly competitive, and the effect of competition is intensified because most of our products are perishable.
Further, any changes in applicable laws and regulations, including their enforcement, interpretation or implementation that result in more stringent requirements than currently anticipated, as well as any new laws and regulations that are adopted could impose significant additional costs and limitations on our ability to operate.
Further, any changes in applicable laws and regulations, including their enforcement, interpretation or implementation that result in more stringent requirements than currently anticipated, as well as any new laws and regulations that are adopted could impose significant additional costs and limitations on our ability to operate. Environmental, social and governance matters and any related reporting obligations may impact our businesses.
While we ultimately settled this matter for an immaterial amount, mitigation strategies or contingency plans to remain in compliance with such laws and regulations in the future may be unsuccessful or may result in additional costs which could adversely affect our business.
While in the past we were able to settle matters for an immaterial amount, mitigation strategies or contingency plans to remain in compliance with such laws and regulations in the future may be unsuccessful or may result in additional costs which could adversely affect our business.
Moreover, short term or sustained increases in consumer demand may exceed our production capacity or otherwise strain our supply chain. Our failure to meet the demand for our products could adversely affect our business and results of operations. A continued shortage of qualified labor could negatively affect our business and materially reduce earnings.
Moreover, short-term or sustained increases in consumer demand may exceed our production capacity or otherwise strain our supply chain. Our failure to meet the demand for our products could adversely affect our business and the results of operations.
As of February 10, 2023, they together directly owned 29.1% of our outstanding Ordinary Shares, and our Chairman and Chief Executive Officer holds, and is expected to continue to hold, an irrevocable proxy to vote all of these shares.
As of February 16, 2024, they together directly owned 28.6% of our outstanding Ordinary Shares, and our Chairman and Chief Executive Officer holds, and is expected to continue to hold, an irrevocable proxy to vote all of these shares.
We protect our technology by, among other things, filing patent applications for technology relating to the development of our business in the U.S., the EU and selected foreign jurisdictions. Our trademarks and brand names are registered in jurisdictions throughout the world.
We rely primarily on patent, copyright, trademark and trade secret laws to protect our proprietary technologies. We protect our technology by, among other things, filing patent applications for technology relating to the development of our business in the U.S., the EU and selected foreign jurisdictions. Our trademarks and brand names are registered in jurisdictions throughout the world.
We rely on our information technology systems, some of which are or may be managed, hosted by or outsourced to third party service providers, to manage our business data, communications, supply chain, order entry and fulfillment and other business processes.
We rely on our information technology systems, some of which are or may be managed, hosted by or outsourced to third party service providers, to manage our business data, communications, supply chain, order entry and fulfillment and other business processes. For example, we partnered with a third party software provider to improve our third party freight and logistic services.
A significant portion of our cost of goods are production and logistics costs which are based on, amongst others, the prices of fuel, labor, fertilizers, inland freight and packing materials, which are out of our control. Consequently, increases in these costs materially and adversely affect our margins.
In addition, a significant portion of our cost of goods for these products is production and logistics costs which are based on, amongst others, the prices of fuel, labor, fertilizers, inland freight and packing materials, which are out of our control.
We review for impairment annually or if indicators of impairment manifest. The goodwill associated with our banana reporting unit and the goodwill, trade names, and trademarks associated with our prepared foods reporting unit are highly sensitive to differences between estimated and actual cash flows and changes in the discount rates used to evaluate their fair value.
In particular, the goodwill associated with our banana reporting unit and the goodwill, trade names, and trademarks associated with our prepared foods reporting unit are highly sensitive to differences between estimated and actual cash flows and changes in the discount rates used to evaluate their fair value.
We use refrigerated delivery trucks to support temperature control for shipments to certain locations. However, delays in our ability to ship or disruption in the distribution of our products could have a material adverse effect on our business, financial condition and results of operations. Keeping our food products at specific temperatures maintains freshness and enhances food safety.
However, delays in our ability to ship or disruption in the distribution of our products could have a material adverse effect on our business, financial condition and results of operations. Keeping our food products at specific temperatures maintains freshness and enhances food safety.
Risks Related to Our Business and Operations The loss of one or more of our largest customers, or a reduction in the level of purchases made by these customers, could negatively impact our sales and profits.
A weaker U.S. dollar may result in increased costs of production abroad. Risks Related to Our Business and Operations The loss of one or more of our largest customers, or a reduction in the level of purchases made by these customers, could negatively impact our sales and profits.
We rely on these systems to, among other things, facilitate communications with our growers, distributors and customers; receive, process and ship orders on a timely basis, and to maintain accurate and up-to-date operating and financial data for the compilation of management information.
We rely on these systems to, among other things, facilitate communications with our growers, distributors and customers; receive, process and ship orders on a timely basis, and to maintain accurate and up-to-date operating and financial data for the compilation of management information. The cyber threat landscape is growing increasingly complex and rapidly evolving, particularly in light of growing geopolitical tensions.
Any such future attack could lead to the public disclosure of customer data, our trade secrets or other intellectual property, personal information of our employees, or material financial and other information related to our business.
Any such future attack could lead to the public disclosure of customer data, our trade secrets or other intellectual property, personal information of our employees, or material financial and other information related to our business. The release of any of this information could have a material adverse effect on our business, reputation, financial condition and results of operations.
We could be unable to accept and fulfill customer orders due to severe weather and natural disasters. Although we have business continuity plans, we cannot provide assurance that our business continuity plans will address all the issues we may encounter in the event of a disaster, or will not lead to increased costs affecting our profitability or other unanticipated issues.
Although we have business continuity plans, we cannot provide assurance that our business continuity plans will address all the issues we may encounter in the event of a disaster, or will not lead to increased costs affecting our profitability or other unanticipated issues.
Risks Related to Global Market Conditions We may not be able to increase prices to fully offset inflationary pressures on costs, such as raw and packaging materials, labor, and distribution costs, which may impact our financial condition or results of operations.
Risks Related to Global Market Conditions We may not be able to increase prices to fully offset continued inflationary pressures on various commodities, raw materials and other costs, which may impact our financial condition or results of operations. As a producer, marketer and distributor of produce, we rely on raw materials, packaging materials, labor, distribution resources and transportation capacity.
For example, in 2018 the California Air Resource Board issued the Company a Notice of Violation alleging violations of certain California anti-air pollution regulations by ships that were subject to a time charter by us from an unrelated non-U.S. third party.
We have in the past and in 2021 received notices from the California Air Resource Board alleging violations of certain California anti-air pollution regulations by ships that were subject to a time charter by us from an unrelated non-U.S. third party.
Severe weather conditions such as floods, droughts, windstorms, hurricanes and wildfires, and natural disasters, such as earthquakes, may adversely affect our supply of one or more fresh produce items, reduce our sales volumes, increase our unit production costs or prevent or impair our ability to ship products as planned.
Severe weather conditions have and are expected to continue to adversely affect our supply of one or more fresh produce items, reduce our sales volumes, increase our unit production costs or prevent or impair our ability to ship products as planned.
We may not be successful in anticipating the demand for these value-added products and services, in establishing the requisite infrastructure to meet customer demand or the provision of these value-added services. For example, the demand for our fresh-cut vegetable products has not met our anticipated levels.
We may not be successful in 17 Table of Contents anticipating the demand for these value-added products and services, in establishing the requisite infrastructure to meet customer demand or the provision of these value-added services.
Any events or rumors that cause consumers and/or institutions to no longer associate these brands with high-quality and safe food products may materially adversely affect the value of our brand names and demand for our products. Adverse information about our brand, whether or not true, may be instantly and easily posted on social media platforms at any time.
Any events or rumors that cause consumers and/or institutions to no longer associate these brands with high-quality and safe food products may materially adversely affect the value of our brand names and demand for our products.
We are subject to risk arising from transportation of our products and those arising from our commercial shipping and logistics business. Our business and employment practices are also subject to regulation by the U.S.
We are subject to legal and environmental risks arising from the transportation of our products and our commercial shipping and logistics business that could result in significant cash outlays. Our business and employment practices are also subject to regulation by the U.S.
We also are subject to the risk of recall events of our competitors which could result in industry-wide reputational loss or consumer avoidance of certain products. We are subject to legal and environmental risks that could result in significant cash outlays.
We also are subject to the risk of recall events of our competitors which could result in industry-wide reputational loss or consumer avoidance of certain products. We are subject to regulations concerning food safety and protection of health and the environment.
Climate change laws could have a material adverse impact on our financial condition and results of operations. Legislative and regulatory authorities in the U.S., the EU, Canada and other international jurisdictions will likely continue to consider measures related to climate change and greenhouse gas emissions.
Legislative and regulatory authorities in the U.S., the EU, Canada and other international jurisdictions will likely continue to consider measures related to climate change and greenhouse gas emissions.
Future actions regarding the availability and use of pesticides could have an adverse effect on us by increasing our production costs, restricting our ability to import certain products, or imposing substantial penalties or bans due to noncompliance.
Future actions regarding the availability and use of pesticides could have an adverse effect on us by increasing our production costs, restricting our ability to import certain products, or imposing substantial penalties or bans due to noncompliance. 24 Table of Contents We may be subject to liability and/or increased costs for environmental damage from the use of herbicides, pesticides and other substances or environmental contamination of our owned or leased property.
A sustained lack of profitability could cause us to incur impairment charges of our intangible and long-lived assets and/or record valuation allowances against our deferred tax assets. If we incur operating losses for a sustained period of time, the carrying value of our goodwill, other intangible assets and long-lived assets could be impaired.
If we incur operating losses for a sustained period of time, the carrying value of our goodwill, other intangible assets and long-lived assets could be impaired. We review for impairment annually or if indicators of impairment manifest.
The failure of any patents, trademarks, trade secrets or other intellectual property rights to provide protection to our technologies would make it easier for our competitors to offer similar products, which could adversely affect our business, financial conditions and results of operations. 18 Table of Contents We may not be able to successfully consummate and manage ongoing acquisition, joint venture and business partnership activities, which could have an adverse impact on our results.
The failure of any patents, trademarks, trade secrets or other intellectual property rights to provide protection to our technologies would make it easier for our competitors to offer similar products, which could adversely affect our business, financial conditions and results of operations.
A continuation of such shortages for a prolonged period could have a material adverse effect on our profitability and our ability to grow. Our strategy of diversifying our product lines, expanding into new geographic markets and increasing the value-added services that we provide to our customers may not be successful.
Our strategy of diversifying our product lines, expanding into new geographic markets and increasing the value-added services that we provide to our customers may not be successful.
Our future success depends upon our ability to attract and retain executive officers and other senior management, especially to support our current operations and business strategy.
Our future success depends upon our ability to attract and retain executive officers and other senior management, especially to support our current operations and business strategy. Our business may be negatively affected if we are unable to retain our existing senior management personnel or attract additional qualified senior management personnel.
Our costs are also affected by fluctuations in the value, relative to U.S. dollar, of the currencies of the countries in which we have significant production operations. A weaker U.S. dollar may result in increased costs of production abroad.
Accordingly, if the U.S. dollar appreciates relative to the foreign currencies in which we receive sales proceeds, our operating results may be negatively affected. Our costs are also affected by fluctuations in the value, relative to U.S. dollar, of the currencies of the countries in which we have significant production operations.
During 2021 and 2022, we made investments in unconsolidated companies within the food, nutrition, and agricultural technology sectors. In the future, we may continue investing in similar companies that align with our long-term strategy and vision. There can be no assurance that we will achieve returns or benefits from these current or future investments.
During 2023 and 2022, we made investments in unconsolidated companies within the food, nutrition, and agricultural technology sectors, as well as in other minority investments. In the future, we may continue investing in similar companies that align with our long-term strategy and vision.
These regulations affect daily operations and, to comply with all applicable laws and regulations, we have been and may be required in the future to modify our operations, purchase new equipment or make capital improvements. Changes to our processes and procedures could impose unanticipated costs and/or materially impact our business.
Our business is regulated by foreign, federal, state and local environmental, health and safety laws and regulations, which involve compliance costs. These regulations affect daily operations and, to comply with all applicable laws and regulations, we have been and may be required in the future to modify our operations, purchase new equipment or make capital improvements.
For instance, in December 2022, we announced the offering of our Del Monte Zero ™ pineapple, which is a carbon neutral certified pineapple. In addition, we have made significant investments in distribution centers, growing operations and prepared food facilities through capital expenditures, including the acquisition of Mann Packing, and have expanded our business into new geographic markets.
For instance, in January 2024, we announced the offering of our Rubyglow ® pineapple, a red-shelled pineapple, which is first being launched in China. In addition, we have made significant investments in distribution centers, growing operations and prepared foods facilities through capital expenditures, and have expanded our business into new geographic markets.
Our business may be negatively affected if we are unable to retain our existing senior management personnel or attract additional qualified senior management personnel. 27 Table of Contents Competition for these individuals is intense and our business may be adversely affected if we are not effective in filling critical leadership positions or in assimilating new executive talent into our organization.
Competition for these individuals is intense and our business may be adversely affected if we are not effective in filling critical leadership positions or in assimilating new executive talent into our organization. Item 1B. Unresolved Staff Comments None.
The release of any of this information could have a material adverse effect on our business, reputation, financial condition and results of operations. 25 Table of Contents In such cases, we may have to operate manually, which may result in considerable delays in the delivery of our products to our customers, damage to our perishable products or interruption to other key business processes.
In such cases, we may have to operate manually, which may result in considerable delays in the delivery of our products to our customers, damage to our perishable products or interruption to other key business processes.
Cybersecurity attacks may cause reputational damage, which could cause a significant decline in consumer preference for our products in certain geographic regions or globally and could potentially reduce our market share. Cybersecurity attacks may also result in the unauthorized access to or release of intellectual property, trade secrets and confidential business or otherwise protected information and corruption of our data.
Cybersecurity attacks may cause reputational damage, which could cause a significant decline in consumer preference for our products in certain geographic regions or globally and could potentially reduce our market share.
Any failure to adequately store, maintain and deliver quality perishable foods could materially adversely affect our business, financial condition and operating results. Our ability to adequately store, maintain and deliver quality perishable foods is critical. We store highly perishable food products in refrigerated fulfillment centers and ship them to our customers while maintaining appropriate temperatures in transit.
Our ability to adequately store, maintain and deliver quality perishable foods is critical. We store highly perishable food products in refrigerated fulfillment centers and ship them to our customers while maintaining appropriate temperatures in transit. We use refrigerated delivery trucks to support temperature control for shipments to certain locations.
Such analysis is a part of our due diligence before investing in agricultural operations, which increases our costs. In the event of water scarcity or deterioration, we may incur increased production costs or face production constraints that may materially and adversely affect our financial condition, results of operations and cash flows.
In the event of water scarcity or deterioration, we may incur increased production costs or face production constraints that may materially and adversely affect our financial condition, results of operations and cash flows. The effects of climate change and climate change laws could have a material adverse impact on our financial condition and results of operations.
For more information about TR4, see “ Risk Factors - Tropical Race 4 (“TR4”) may impose significant costs and losses on our business. ” In recent years, the food industry has been subject to negative publicity about the health implications of GMOs, added sugars, trans fat, salt, artificial growth hormones and ingredients sourced from foreign suppliers.
For more information about TR4, see “ Risk Factors - Our agricultural plantings are potentially subject to damage from crop disease or insect infestations, which could adversely impact our operating results and financial condition. ” In recent years, the food industry has been subject to negative publicity about the health implications of GMOs, added sugars, trans fat, salt, artificial growth hormones and ingredients sourced from foreign suppliers.
Unfavorable changes in employee and related labor costs could impact our business, results of operations and financial condition. In addition, a material portion of our employees work under various syndicatos , work councils, collective bargaining agreements or other agreements with similar types of entities.
In addition, a material portion of our employees work under various syndicates, work councils, collective bargaining agreements or other agreements with similar types of entities.
Such information could be leaked to competitors or the public which may result in loss of competitive position and market share.
Cybersecurity attacks may also result in the unauthorized access to or release of intellectual property, trade secrets and confidential business or otherwise protected information and corruption of our data. Such information could be leaked to competitors or the public which may result in loss of competitive position and market share.
We periodically utilize forward contracts to hedge against our exposure to currency fluctuations, but we may at times be unable to agree to favorable terms or agree to terms that do not adequately offset currency fluctuations. Accordingly, if the U.S. dollar appreciates relative to the foreign currencies in which we receive sales proceeds, our operating results may be negatively affected.
We periodically utilize forward contracts to hedge against a portion of our exposure to currency fluctuations, but we may at times be unable to agree to favorable terms or agree to terms that do not adequately offset currency fluctuations.
Our growth strategy includes acquisitions and expansion. Accordingly, we may acquire other businesses or enter into joint ventures or other business partnerships from time to time.
We may not be able to successfully consummate and manage ongoing acquisition, joint venture and business partnership activities, which could have an adverse impact on our results. Our growth strategy includes acquisitions and expansion. Accordingly, we may acquire other businesses or enter into joint ventures or other business partnerships from time to time.
In late 2021 and continuing into 2022, we increased retail prices as a result of these increased costs. However, retail price increases may not sufficiently reverse the reduced profit margins and could result in loss of sales if our competitors do not also increase their prices.
However, retail price increases may not sufficiently reverse the reduced profit margins and could result in loss of sales if our competitors do not also increase their prices. These cost pressures will likely continue to negatively impact our profitability in the future, and we cannot predict their extent or duration.
These risks can be exacerbated when a substantial portion of our production of a specific product is grown in one region, provided by a limited number of suppliers, or when it endangers one of our primary products. In 2020, two hurricanes, Eta and Iota, impacted our farm operations in Guatemala.
These risks can be exacerbated when a substantial portion of our production of a specific product is grown in one region, provided by a limited number of suppliers, or when it endangers one of our primary products. Adverse weather may also impact our supply chains, preventing us from procuring necessary supplies and delivering our products to our customers.
If sales of our products to one or more of our largest customers are reduced or we are unable to collect payment, our business, financial condition and results of operations may be adversely affected. 16 Table of Contents We are dependent on our relationships with key suppliers to obtain a number of our products.
If sales of our products to one or more of our largest customers are reduced or we are unable to collect payment, our business, financial condition and results of operations may be adversely affected. 16 Table of Contents Shortages of qualified labor, increases in wage and benefit costs, changes in laws and other labor regulations, and labor disruptions could impact our financial results and decrease our profitability.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn the UAE, we lease a combined distribution and manufacturing center in Dubai. This facility includes fresh-cut fruit and vegetable operations, an ultra fresh juice manufacturing operation and prepared food manufacturing. In Saudi Arabia, we own 60% of a joint venture that owns two strategically located distribution centers in Jeddah and Riyadh as of year end 2022.
Biggest changeIn Saudi Arabia, we own 60% of a joint venture that leases two strategically located distribution centers in Jeddah and Riyadh as of year end 2023. In Kuwait, we have an F&B store and we lease a facility for manufacturing and/or distribution of fresh-cut and fresh produce, and ultra-fresh juices.
All of our distribution centers have ripening capabilities and/or other value-added services. We own an avocado packing facility in Uruapan, Mexico. We also lease four port facilities that include cold storage capabilities. Europe We own and operate a fresh-cut fruit facility in Wisbech, England.
All of our distribution centers have ripening capabilities and/or other value-added services. We own an avocado packing facility in Uruapan, Mexico. We also lease five port facilities that include cold storage capabilities. Europe We own and operate a fresh-cut fruit facility in Wisbech, England.
One is owned and the other two are leased. In Hong Kong, we lease a distribution center. In addition, we lease two distribution centers in South Korea and own one facility that includes a fresh-cut fruit and vegetable operation. Our distribution centers include ripening technology and other value-added services.
In Japan, we also operate three fresh-cut fruit facilities. One is owned and the other two are leased. In Hong Kong, we lease a distribution center. In addition, we lease two distribution centers in South Korea and own one facility that includes a fresh-cut fruit and vegetable operation. Our distribution centers include ripening technology and other value-added services.
In Larissa, Greece, we own and operate a production facility for prepared fruit, tomato products and snacks. In Frankfurt, Germany, we own a distribution center which is currently held for sale. Asia Our products are distributed from four leased distribution centers located at strategic ports in Japan with cold storage. In Japan, we also operate three fresh-cut fruit facilities.
In Larissa, Greece, we own and operate a production facility for prepared fruit, tomato products and snacks. In Frankfurt, Germany, we own a distribution center which is currently leased to a third party. Asia Our products are distributed from four leased distribution centers located at strategic ports in Japan with cold storage.
In 28 Table of Contents Panama, we have a banana operation on leased land; approximately 2,500 acres of this leased land were under production at the end of 2022. South America In Brazil, we own approximately 28,000 acres of land of which 1,800 acres are under production. In Uruguay, we own approximately 7,800 acres.
In Panama, we have a banana operation on leased land; approximately 2,500 acres of this leased land were under production at the end of 2023. 30 Table of Contents South America In Brazil, we own approximately 27,000 acres of land of which 2,200 acres are under production.
Properties The following table summarizes the approximate plantation acreage under production that are owned or leased by us and the principal products grown on such plantations by location as of the end of 2022: Acres Under Production Location Acres Owned Acres Leased Products Costa Rica 43,807 5,222 Bananas, Pineapples, Melons Philippines — 18,305 Bananas, Pineapples Guatemala 8,655 4,937 Bananas, Melons Kenya — 8,356 Pineapples Chile 2,923 1,522 Non-Tropical Fruit Panama — 2,533 Bananas Brazil 1,820 — Bananas, Other Crops United States 599 — Melons Our significant properties include the following, which all relate to our fresh and value-added products or banana segments unless otherwise noted: North America We operate a total of 27 distribution centers in the United States and Canada, of which 15 are also fresh-cut facilities.
Properties The following table summarizes the approximate plantation acreage under production that are owned or leased by us and the principal products grown on such plantations by location as of the end of 2023: Acres Under Production Location Acres Owned Acres Leased Products Costa Rica 45,996 5,007 Bananas, Pineapples, Melons Philippines — 17,622 Bananas, Pineapples Guatemala 8,446 5,805 Bananas, Melons Kenya — 11,362 Pineapples Chile 2,073 1,366 Non-Tropical Fruit Panama — 1,025 Bananas Brazil 2,282 2,083 Bananas, Other Crops United States 600 — Melons Our significant properties include the following, which all relate to our fresh and value-added products or banana segments unless otherwise noted: North America We operate a total of 27 distribution centers in the United States and Canada, of which 15 are also fresh-cut facilities.
Middle East In Jordan, we own an integrated poultry business including poultry farms, hatcheries, a feed mill, a poultry slaughterhouse and a meat processing plant which relate to our other products and services segment. In Jordan, we also own a 25 acre hydroponic greenhouse on leased land where we have a fresh-cut processing center.
Africa In Thika, Kenya, we own and operate a warehouse, a pineapple cannery, a fresh pineapple packing facility, and a juice production facility. Middle East In Jordan, we own an integrated poultry business including poultry farms, hatcheries, a feed mill, a poultry slaughterhouse and a meat processing plant which relate to our other products and services segment.
In Chile, we own approximately 6,500 acres of land, of which approximately 2,900 acres are primarily used for production of non-tropical fruits. We also lease approximately 1,500 acres in Chile for non-tropical fruit production. Africa In Thika, Kenya, we own and operate a warehouse, a pineapple cannery, a fresh pineapple packing facility, and a juice production facility.
In Uruguay, we own approximately 6,400 acres which is leased to a third party. In Chile, we own approximately 6,400 acres of land, of which approximately 2,000 acres are primarily used for production of non-tropical fruits. We also lease approximately 1,300 acres in Chile for non-tropical fruit production.
Removed
We entered into an agreement to sell these two facilities, and leaseback a portion of the space, in the first quarter of 2023. In Kuwait, we have an F&B store and we lease a facility for manufacturing and/or distribution of fresh-cut and fresh produce, and ultra-fresh juices.
Added
In Jordan, we also own a 25 acre hydroponic greenhouse on leased land where we have a fresh-cut processing center. In the UAE, we lease a combined distribution and manufacturing center in Dubai. This facility includes fresh-cut fruit and vegetable operations, an ultra fresh juice manufacturing operation and prepared foods manufacturing.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn one of the foreign jurisdictions, we are currently contesting tax assessments related to the 2012-2015 audit years and the 2016 audit year in both the administrative court and the judicial court. During 2019 and 2020, we filed actions contesting the tax assessment in the administrative office.
Biggest changeWe strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities. In one of the foreign jurisdictions, we are currently contesting tax assessments related to the 2012-2015 audit years and the 2016 audit year in both the administrative court and the judicial court.
We timely appealed the denial of the injunction, and on August 10, 2022 the appellate court overturned the denial and granted our injunction for the 2012-2015 audit years. Pursuant to local law, we registered real estate collateral with an approximate fair market value of $6.0 million in connection with the grant of the 2016 audit year injunction.
We timely appealed the denial of the injunction, and on August 10, 2022 the appellate court overturned the denial and granted our injunction for the 2012-2015 audit years. Pursuant to local law, we registered real estate collateral with an approximate fair market value of $7.0 million in connection with the grant of the 2016 audit year injunction.
Item 3. Legal Proceedings Tax related matters In connection with the examination of the tax returns in two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $160.2 million (including interest and penalties) for tax years 2012 through 2016.
Item 3. Legal Proceedings Tax related matters In connection with the examination of the tax returns in two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $165.4 million (including interest and penalties) for tax years 2012 through 2016.
We will continue to vigorously contest the adjustments and to exhaust all administrative and judicial remedies necessary in both jurisdictions to resolve the matters, which could be a lengthy process. Item 4. Mine Safety Disclosures Not applicable. PART II
We will continue to vigorously contest the adjustments and to exhaust all administrative and judicial remedies necessary in both jurisdictions to resolve the matters, which could be a lengthy process. 31 Table of Contents Item 4. Mine Safety Disclosures Not applicable. PART II
Our initial challenge to each of these tax assessments was rejected, and we subsequently lost our appeals at the administrative court. We have subsequently filed actions to contest each of these tax assessments in the country’s judicial courts.
During 2019 and 2020, we filed actions contesting the tax assessment in the administrative office. Our initial challenge to each of these tax assessments was rejected, and we subsequently lost our appeals at the administrative court. We have subsequently filed actions to contest each of these tax assessments in the country’s judicial courts.
This real estate collateral has a net book value of $3.8 million as of the year ended December 30, 2022.
This real estate collateral has a net book value of $3.8 million as of the year ended December 29, 2023.
In addition, in connection with the grant of the 2012-2015 audit year injunction, we registered real estate collateral with an approximate fair market value of $24.0 million, and a net book value of $4.6 million as of the year ended December 30, 2022.
In addition, in connection with the grant of the 2012-2015 audit year injunction, we registered real estate collateral with an approximate fair market value of $28.5 million, and a net book value of $4.6 million as of the year ended December 29, 2023. The registration of this real estate collateral does not affect our operations in the country.
The registration of this real estate collateral does not affect our operations in the country. 29 Table of Contents In the other foreign jurisdiction, the administrative court denied our appeal, and on March 4, 2020 we filed an action in the judicial court to contest the administrative court's decision. The case is still pending.
In the other foreign jurisdiction, the administrative court denied our appeal, and on March 4, 2020 we filed an action in the judicial court to contest the administrative court's decision. The case is still pending.
Removed
We strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities as we believe that the proposed adjustments are without technical merit.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe declaration, amount and payment of future dividends, if any, will be at the discretion of our Board of Directors and will depend upon many factors, including our results of operations, financial condition, capital requirements, restrictions in our debt agreements and other factors that our Board of Directors deem relevant. 30 Table of Contents Performance Graph The following graph compares the cumulative five-year total return of holders of FDP ordinary shares with the cumulative total returns of the S&P Smallcap 600 and S&P 600 Food Products indexes.
Biggest changeThe declaration, amount and payment of future dividends, if any, will be at the discretion of our Board of Directors and will depend upon many factors, including our results of operations, financial condition, capital requirements, restrictions in our debt agreements and other factors that our Board of Directors deem relevant.
As of February 10, 2023, we had 362 shareholders of record, which excludes shareholders whose shares were held by brokerage firms, depositories and other institutional firms. Dividends Holders of our Ordinary Shares are entitled to receive dividends when and if they are declared by our Board of Directors.
As of February 16, 2024, we had 381 shareholders of record, which excludes shareholders whose shares were held by brokerage firms, depositories and other institutional firms. Dividends Holders of our Ordinary Shares are entitled to receive dividends when and if they are declared by our Board of Directors.
The graph tracks the performance of a $100 investment in our common stock and in each of the indexes (with the reinvestment of all dividends) from December 29, 2017 to December 30, 2022. 12/29/2017 12/28/2018 12/27/2019 1/1/2021 12/31/2021 12/30/2022 Fresh Del Monte Produce Inc. 100.00 60.01 75.12 52.13 60.75 58.93 S&P Smallcap 600 100.00 91.52 112.37 125.05 158.59 133.06 S&P 600 Food Products 100.00 91.60 106.59 104.53 115.45 111.69 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 31 Table of Contents Item 6.
The graph tracks the performance of a $100 investment in our common stock and in each of the indexes (with the reinvestment of all dividends) from December 28, 2018 to December 29, 2023. 12/28/2018 12/27/2019 1/1/2021 12/31/2021 12/30/2022 12/29/2023 Fresh Del Monte Produce Inc. 100.00 125.18 86.88 101.24 98.22 101.25 S&P Smallcap 600 100.00 122.78 136.64 173.29 145.39 168.73 S&P 600 Food Products 100.00 116.36 114.12 126.04 121.94 133.07 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 33 Table of Contents Item 6.
Our Board of Directors declared and paid a cash dividend of $0.15 per share during each of the four quarters of 2022. In addition, on February 21, 2023, our Board of Directors declared a cash dividend of $0.15 per share, payable on March 31, 2023 to shareholders of record on March 8, 2023.
In addition, on February 23, 2024, our Board of Directors declared a cash dividend of $0.25 per share, payable on March 29, 2024 to shareholders of record on March 7, 2024.
Added
Our Board of Directors declared and paid a cash dividend of $0.15 per share during the first quarter of 2023 and a cash dividend of $0.20 per share during the second, third, and fourth quarters of 2023.
Added
Issuer Purchases of Equity Securities Our share repurchase activity in the three months ended December 29, 2023 was: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs September 30, 2023 to October 27, 2023 — $ — — October 28, 2023 to November 24, 2023 500,000 $ 23.66 500,000 November 25, 2023 to December 29, 2023 — $ — — Total 500,000 $ — (1) On November 2, 2023, our Board of Directors approved a share repurchase plan (the "Share Repurchase Plan") pursuant to which we may purchase up to 500,000 of our Ordinary Shares.
Added
During the fourth quarter of 2023, the Company completed the purchase of the 500,000 Ordinary Shares authorized under the Share Repurchase Plan for $11.8 million. 32 Table of Contents Performance Graph The following graph compares the cumulative five-year total return of holders of FDP ordinary shares with the cumulative total returns of the S&P Smallcap 600 and S&P 600 Food Products indexes.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+51 added−57 removed43 unchanged
Biggest changeAsset impairment and other (credits) charges, net of $4.5 million in 2021 primarily related to fixed asset impairments and other expenses incurred in connection with our exit from two low-yield banana farms in the Philippines, partially offset by an insurance recovery associated with hurricane damages in Guatemala. 35 Table of Contents Operating income - Operating income increased by $45.3 million in 2022 when compared against 2021, mainly due to higher gross profit, the Kunia Well Site liability adjustment, and lower selling, general, and administrative expenses, partially offset by a slight net loss on disposals of property, plant, and equipment in 2022 when compared to a net gain in 2021.
Biggest changeOperating income - Operating income decreased by $97.8 million in 2023 when compared against 2022, mainly due to higher asset impairment and other charges (credits), partially offset by higher gross profit and larger gains on the disposal of property, plant and equipment when compared to a loss on disposal of property, plant and equipment in 2022. 37 Table of Contents Interest expense - Interest expense decreased by $0.3 million in 2023 when compared against 2022, due to higher interest rates, partially offset by lower average debt balances.
Asset impairment and other (credits) charges, net - Asset impairment and other (credits) charges, net of $(4.8) million in 2022 primarily consisted of (1) a $(9.9) million reduction to our environmental liability for the Kunia Well Site clean-up in Hawaii, partially offset by (2) a $2.7 million impairment of banana-related fixed assets in the Philippines due to flooding as a result of heavy rainfall and (3) severance expenses in connection with the departure of our former President and Chief Operating Officer.
Asset impairment and other (credits) charges, net of $(4.8) million in 2022 primarily related to (1) a $(9.9) million reduction to our environmental liability for the Kunia Well Site clean-up in Hawaii, partially offset by (2) a $2.7 million impairment of banana-related fixed assets in the Philippines due to flooding as a result of heavy rainfall and (3) severance expenses in connection with the departure of our former President and Chief Operating Officer.
Impairment of Long-Lived Assets We review long-lived assets (or asset groups) with identifiable cash flows for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Impairment of Long-Lived Assets We review long-lived assets (or asset groups) with identifiable cash flows for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount of an asset may not be recoverable.
Sea transportation cost is the most significant component of logistics costs and is comprised of: • Ship operating expenses - includes operations, maintenance, depreciation, insurance, fuel (the cost of which is subject to commodity price fluctuations), and port charges. • Chartered ship costs - includes the cost of chartering the ships, fuel and port charges. • Container equipment-related costs - includes leasing expense and in the case of owned equipment, also depreciation expense. 33 Table of Contents • Third-party containerized shipping costs - includes the cost of using third-party shipping in our logistics operations.
Sea transportation cost is the most significant component of logistics costs and is comprised of: • Ship operating expenses - includes operations, maintenance, depreciation, insurance, fuel (the cost of which is subject to commodity price fluctuations), and port charges. 35 Table of Contents • Chartered ship costs - includes the cost of chartering the ships, fuel and port charges. • Container equipment-related costs - includes leasing expense and in the case of owned equipment, also depreciation expense. • Third-party containerized shipping costs - includes the cost of using third-party shipping in our logistics operations.
Other We are involved in several legal and environmental matters that, 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 Item 1. Business Overview under “ Environmental Proceedings ” and Item 3.
Other We are involved in several legal and environmental matters that, 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 Part I, Item 1. Business Overview under “ Environmental Proceedings ” and Part I, Item 3.
(Loss) gain on disposal of property, plant and equipment, net - The loss on disposal of property, plant and equipment, net of $(1.9) million during 2022 primarily related to the disposal of low-yielding banana crops in Central America, partially offset by gains on the sale of vacant land in Mexico and sales of vehicles in the Middle East.
The loss on disposal of property, plant and equipment, net and subsidiary of $(1.9) million during 2022 primarily related to the disposal of low-yielding banana crops in Central America, partially offset by gains on the sale of vacant land in Mexico and sales of vehicles in the Middle East.
During 2022 and 2021, capital expenditures primarily related to (1) improvements and enhancements to our production facilities in North America, Europe, Asia, and the Middle East; (2) improvements to our pineapple operations in Central America and Kenya; and (3) operational investments in automation and data-driven technology, mainly in North America.
During 2023 and 2022, capital expenditures primarily related to (1) improvements and enhancements to our production facilities in North America, Europe, Asia, and the Middle East; (2) improvements to our pineapple operations in Central America and Kenya; and (3) operational investments in automation and data-driven technology, mainly in North America.
As a result of the review, we identified assets across all of our regions, primarily consisting of underutilized facilities and land, which we made a strategic decision to sell for total anticipated cash proceeds of approximately $100.0 million.
As a result of this review, we identified assets across all of our regions, primarily consisting of underutilized facilities and land, for which we made a strategic decision to sell for total anticipated cash proceeds of approximately $100.0 million.
We expect that $1.0 million of the net fair value of designated hedges recognized as a net gain in accumulated other comprehensive loss will be transferred to earnings during the next 12 months, and the remaining net gain of $7.2 million over the following 5 years, along with the earnings effect of the related forecasted transactions.
We expect that $2.3 million of the net fair value of designated hedges recognized as a net gain in accumulated other comprehensive loss will be transferred to earnings during the next 12 months, and the remaining net gain of $2.1 million over the following 5 years, along with the earnings effect of the related forecasted transactions.
Effective September 13, 2022, we exercised our option as included in the Second A&R Credit Agreement to reduce the borrowing limit on the Revolving Credit Facility from the original limit of $1.1 billion to $0.9 billion. Certain of our direct and indirect subsidiaries have guaranteed the obligations under the Second A&R Credit Agreement.
Effective September 13, 2022, we exercised our option as included in the Second A&R Credit Agreement to reduce the borrowing limit on the Revolving Credit Facility from the original limit of $1.1 billion to $0.9 billion. Certain of our direct and indirect subsidiaries have guaranteed the obligations under the Second A&R Credit 40 Table of Contents Agreement.
Our liquidity assumptions, the adequacy of our available funding sources, and our ability to meet our Revolving Credit Facility covenants are dependent on many additional factors, including those set forth in Part I. Item 1A, “ Risk Factors ” of this annual report Form 10-K.
Our liquidity assumptions, the adequacy of our available funding sources, and 41 Table of Contents our ability to meet our Revolving Credit Facility covenants are dependent on many additional factors, including those set forth in Part I. Item 1A, “ Risk Factors ” of this Annual Report on Form 10-K.
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 42 Table of Contents the year in which the differences are expected to affect taxable income.
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 affect taxable income.
Certain of our subsidiaries 39 Table of Contents periodically enter into foreign currency forward contracts in order to hedge portions of forecasted sales or cost of sales denominated in foreign currencies, which generally mature within one year.
Certain of our subsidiaries periodically enter into foreign currency forward contracts in order to hedge portions of forecasted sales or cost of sales denominated in foreign currencies, which generally mature within one year.
However, the impact of seasonality on our financial results was atypical during fiscal year 2022, particularly in our banana segment, where current market conditions led to a more significant portion of our gross profit being generated in the second half of the year when compared with historical results.
The impact of seasonality on our financial results was atypical during fiscal year 2022, particularly in our banana segment, where market conditions led to a more significant portion of our gross profit being generated in the second half of the year when compared with historical results and the results of our fiscal year 2023.
Refer to the “ Current Macroeconomic Environment and Inflation Impact " section above for further discussion regarding the impact of inflationary cost pressures on our fiscal year 2022 financial results.
Refer to the “ Current Macroeconomic Environment and Inflation Impact " section above for further discussion regarding the impact of inflationary cost pressures on our fiscal years 2022 and 2023 financial results.
If we bypass the qualitative assessment, or if the qualitative assessment indicates that a quantitative analysis should be performed, we evaluate goodwill for impairment by comparing the fair value of a reporting unit to its carrying value, including the associated goodwill.
If we bypass the qualitative assessment, or if the qualitative assessment indicates that a quantitative analysis should be performed, we perform a quantitative test for impairment by comparing the fair value of each reporting unit to its carrying value, including the associated goodwill.
Fiscal Year Our fiscal year end is the last Friday of the calendar year or the first Friday subsequent to the end of the calendar year, whichever is closest to the end of the calendar year. Fiscal year 2022 had 52 weeks and ended on December 30, 2022. Fiscal year 2021 had 52 weeks and ended on December 31, 2021.
Fiscal Year Our fiscal year end is the last Friday of the calendar year or the first Friday subsequent to the end of the calendar year, whichever is closest to the end of the calendar year. Fiscal year 2023 had 52 weeks and ended on December 29, 2023. Fiscal year 2022 had 52 weeks and ended on December 30, 2022.
The Second A&R Credit 38 Table of Contents Agreement provides for a five-year, $0.9 billion syndicated senior unsecured revolving credit facility (the “Revolving Credit Facility”) maturing on October 1, 2024.
The Second A&R Credit Agreement provides for a five-year, $0.9 billion syndicated senior unsecured revolving credit facility (the “Revolving Credit Facility”) maturing on October 1, 2024.
We expect to fund these capital expenditures which primarily relate to our fresh and value-added and banana segments through operating cash flows and borrowings under our credit facility. Financing Activities Net cash used in financing activities was $12.0 million for 2022 and $53.2 million for 2021.
We expect to fund these capital expenditures which primarily relate to our fresh and value-added and banana segments through operating cash flows and borrowings under our credit facility. Financing Activities Net cash used in financing activities was $213.5 million for 2023 and $12.0 million for 2022.
Subsequent to the year ended December 30, 2022, our 60% owned joint venture in Saudi Arabia entered into a sale and purchase agreement to sell two distribution centers and related assets for a total purchase price of $67.6 million.
During the year ended December 29, 2023, our 60% owned joint venture in Saudi Arabia entered into a sale and purchase agreement to sell two distribution centers and related assets for a total purchase price of $67.6 million.
The fair value of our derivatives related to our foreign currency cash flow hedges was a liability position of $6.7 million as of December 30, 2022 compared to a net liability position of $13.7 million as of December 31, 2021 due to the relative strengthening or weakening of exchange rates when compared to the contracted rates.
The fair value of our derivatives related to our foreign currency cash flow hedges was a liability position of $0.3 million as of December 29, 2023 compared to a net liability position of $6.7 million as of December 30, 2022 due to the relative strengthening or weakening of exchange rates when compared to the contracted rates.
Capital expenditures for 2023 are expected to be approximately $90.0 million, primarily consisting of (1) investments in our operations and production facilities in North America, including expenditures related to automation and technology initiatives and the relocation of one of our port facilities, (2) upgrades to our pineapple and banana production operations in Central America, and (3) investments to improve and expand our fresh-cut and prepared food operations in Europe.
Capital expenditures for 2024 are expected to be approximately $76 million, primarily consisting of (1) investments in our operations and production facilities in North America, including expenditures related to automation and technology initiatives and the relocation of one of our port facilities, (2) upgrades to our pineapple and banana production operations in Central America, and (3) investments to improve and expand our fresh-cut and prepared foods operations in Africa.
As of the year ended December 30, 2022, we have received cash proceeds of $65.7 million in connection with asset sales under the 2020 Optimization Program (approximately $57.0 million of which was received during fiscal years 2020 and 2021).
As of the year ended December 29, 2023, we had received cash proceeds of $156.0 million in connection with asset sales under the 2020 Optimization Program (approximately $65.7 million of which was received during fiscal years 2020, 2021, and 2022).
If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value. The impairment of goodwill is limited to the total amount of goodwill allocated to the reporting unit.
If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value.
A summary of our cash flows is as follows (U.S. dollars in millions): Year ended December 30, 2022 December 31, 2021 January 1, 2021 Summary cash flow information: Net cash provided by operating activities $ 61.8 $ 128.5 $ 180.6 Net cash used in investing activities (49.1) (82.5) (108.8) Net cash used in financing activities (12.0) (53.2) (85.8) Effect of exchange rate changes on cash 0.4 6.8 (2.8) Net increase (decrease) in cash and cash equivalents 1.1 (0.4) (16.8) Cash and cash equivalents, beginning 16.1 16.5 33.3 Cash and cash equivalents, ending $ 17.2 $ 16.1 $ 16.5 Operating activities Net cash provided by operating activities was $61.8 million for 2022 compared with $128.5 million for 2021, a decrease of $66.7 million.
A summary of our cash flows is as follows (U.S. dollars in millions): Year ended December 29, 2023 December 30, 2022 December 31, 2021 Summary cash flow information: Net cash provided by operating activities $ 177.9 $ 61.8 $ 128.5 Net cash provided by (used in) investing activities 56.4 (49.1) (82.5) Net cash used in financing activities (213.5) (12.0) (53.2) Effect of exchange rate changes on cash (4.2) 0.4 6.8 Net increase (decrease) in cash and cash equivalents 16.6 1.1 (0.4) Cash and cash equivalents, beginning 17.2 16.1 16.5 Cash and cash equivalents, ending $ 33.8 $ 17.2 $ 16.1 Operating activities Net cash provided by operating activities was $177.9 million for 2023 compared with $61.8 million for 2022, an increase of $116.1 million.
Net cash used in financing activities for 2022 primarily consisted of dividends paid of $28.7 million, partially offset by net borrowings on long-term debt of $20.7 million. Net cash used in financing activities for 2021 primarily consisted of net payments on long-term debt of $22.6 million and dividends paid of $23.7 million.
Net cash used in financing activities for 2022 primarily consisted of dividends paid of $28.7 million, partially offset by net borrowings on long-term debt of $20.7 million.
The following discussion includes forward-looking statements that involve certain risks and uncertainties, including, but not limited to, those described in Item 1A. Risk Factors. Our actual results may differ materially from those discussed below. See “Special Note Regarding Forward-Looking Statements” and Item 1A. Risk Factors.
The following discussion includes forward-looking statements that involve certain risks and uncertainties, including, but not limited to, those described in Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K. Our actual results may differ materially from those discussed below. See “Special Note Regarding Forward-Looking Statements” below and Part I, Item 1A.
Including the effect of our foreign currency hedges, net sales in 2022 were negatively impacted by $104.0 million primarily due to fluctuations in exchange rates versus the euro, Japanese yen, Korean won and British pound.
Including the effect of our foreign currency hedges, net sales in 2023 were negatively impacted by $39.9 million primarily due to fluctuations in exchange rates versus the euro, Japanese yen, Korean won, Kenyan shilling and British pound.
The fair value of the derivatives related to our interest rate swap cash flow hedges was an asset position of $15.8 million as of December 30, 2022 compared to liability of $29.4 million as of December 31, 2021.
The fair value of the derivatives related to our interest rate swap cash flow hedges was an asset position of $7.9 million as of December 29, 2023 compared to an asset position of $15.8 million as of December 30, 2022.
Overview We are one of the world’s leading vertically integrated producers, marketers and distributors of high-quality fresh and fresh-cut fruit and vegetables, as well as a leading producer and marketer of prepared fruit and vegetables, juices, beverages and snacks in Europe, Africa and the Middle East.
Risk Factors, of this Annual Report on Form 10-K. Overview We are one of the world’s leading vertically integrated producers, marketers and distributors of high-quality fresh and fresh-cut fruit and vegetables, as well as a leading producer and marketer of prepared fruit and vegetables, juices, beverages and snacks in Europe, Africa and the Middle East.
The following table highlights the sensitivities of the indefinite-lived intangibles at risk as of December 30, 2022 (U.S. dollars in millions): Banana Reporting Unit Goodwill Prepared Food Reporting Unit Goodwill Prepared Food Reporting Unit Del Monte ® Trade Names and Trademarks Carrying value of indefinite-lived intangible assets $ 64.1 $ 48.8 $ 30.8 Approximate percentage by which the fair value exceeds the carrying value based on the annual impairment test 11.4 % 11.7 % 15.9 % Amount that a one percentage point increase in the discount rate and a 5% decrease in cash flows would cause the carrying value to exceed the fair value and trigger an impairment $ 58.5 $ 26.3 $ — As of December 30, 2022, we are not aware of any items or events that would cause an adjustment to the carrying value of our goodwill and indefinite-lived intangible assets.
The following table highlights the sensitivities of the goodwill and indefinite-lived intangible assets at risk as of December 29, 2023 (U.S. dollars in millions): Banana Reporting Unit Goodwill Prepared Foods Reporting Unit Goodwill Prepared Foods Reporting Unit Del Monte ® Trade Names and Trademarks Carrying value of indefinite-lived intangible assets $ 64.4 $ 27.2 $ 30.8 Approximate percentage by which the fair value exceeds the carrying value based on the annual impairment test 23.2 % — % 6.2 % Amount that a one percentage point increase in the discount rate and a 5% decrease in cash flows would cause the carrying value to exceed the fair value and trigger an (additional) impairment $ 8.9 $ 27.2 $ 2.3 As of December 29, 2023, we are not aware of any additional items or events, other than the impairment recorded in our prepared foods reporting unit during the fourth quarter of 2023, that would cause an adjustment to the carrying value of our goodwill and indefinite-lived intangible assets.
Fiscal year 2020 had 53 weeks and ended on January 1, 2021. Current Macroeconomic Environment and Inflation Impact During fiscal year 2021, we began experiencing inflationary and cost pressures due to volatility and disruption in the global economy.
Fiscal year 2021 had 52 weeks and ended on December 31, 2021. Current Macroeconomic Environment and Inflation Impact Starting in fiscal year 2021, we began experiencing inflationary and cost pressures due to volatility and disruption in the global economy.
Capital expenditures related to the fresh and value-added products segment accounted for $29.1 million, or 61%, of our 2022 capital expenditures and $29.5 million, or 30%, of our 2021 capital expenditures.
Capital expenditures related to the fresh and value-added products segment accounted for $31.3 million, or 54%, of our 2023 capital expenditures and $29.1 million, or 61%, of our 2022 capital expenditures.
The Second A&R Credit Agreement interest rate grid provides for five pricing levels for interest rate margins. In addition, we pay an unused commitment fee. At December 30, 2022, we had borrowings of $539.8 million outstanding under the Revolving Credit Facility bearing interest at a per annum rate of 5.55%.
The Second A&R Credit Agreement interest rate grid provides for five pricing levels for interest rate margins. In addition, we pay an unused commitment fee. At December 29, 2023, we had borrowings of $400.0 million outstanding under the Revolving Credit Facility bearing interest at a per annum rate of 6.59%.
Item 1A, “ Risk Factors ” for further discussion. 32 Table of Contents Optimization Program During fiscal 2020, we performed a comprehensive review of our asset portfolio aimed at identifying non-strategic and underutilized assets to dispose of while reducing costs and driving further efficiencies in our operations (hereon referred to as the “2020 Optimization Program”).
Optimization Program During fiscal 2020, we performed a comprehensive review of our asset portfolio aimed at identifying non-strategic and underutilized assets to dispose of while reducing costs and driving further efficiencies in our operations (which we refer to as the “2020 Optimization Program”).
In connection with the examination of the tax returns in two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $160.2 million (including interest and penalties) for tax years 2012 through 2016.
In connection with the examination of the tax returns in two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $165.4 million (including interest and penalties) for tax years 2012 through 2016. We strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities.
Capital expenditures related to the banana segment accounted for $15.1 million, or 31%, of total 2022 capital expenditures and $20.0 million, or 20%, of total 2021 capital expenditures. During both years, these capital expenditures primarily related to (1) improvements to our production operations in Central America; (2) improvements to our distribution centers; and (3) information technology initiatives.
Capital expenditures related to the banana segment accounted for $12.8 million, or 22%, of total 2023 capital expenditures and $15.1 million, or 31%, of total 2022 capital expenditures. During 2023, these capital expenditures primarily related to improvements to our production operations in Central America. During 2022, these capital expenditures also included improvements to our distribution centers and information technology initiatives.
Accordingly, we have not accrued any additional amounts based upon the proposed adjustments. There can be no assurance that these matters will be resolved in our favor, and an adverse outcome of either matter, or any future tax examinations involving similar assertions, could have a material effect on our financial condition, results of operations and cash flows.
There can be no assurance that these matters will be resolved in our favor, and an adverse outcome of either matter, or any future tax examinations involving similar assertions, could have a material effect on our financial condition, results of operations and cash flows. See Part I, Item 3.
Financial Results by Segment The following table presents net sales and gross profit by segment (U.S. dollars in millions) and gross margin percentage: Year ended December 30, 2022 December 31, 2021 January 1, 2021 Segments Net Sales Gross Profit Gross Margin Net Sales Gross Profit Gross Margin Net Sales Gross Profit Gross Margin Fresh and value-added products $ 2,581.8 $ 183.0 7.1 % $ 2,504.8 $ 180.2 7.2 % $ 2,484.1 $ 159.1 6.4 % Banana 1,619.8 120.7 7.5 % 1,581.1 110.9 7.0 % 1,602.6 85.6 5.3 % Other products and services 240.7 36.5 15.2 % 166.1 12.7 7.6 % 115.6 6.2 5.4 % $ 4,442.3 $ 340.2 7.7 % $ 4,252.0 $ 303.8 7.1 % $ 4,202.3 $ 250.9 6.0 % Fresh and value-added products Net sales for 2022 increased by $77.0 million, or 3%, when compared against 2021.
Financial Results by Segment The following table presents net sales and gross profit by segment (U.S. dollars in millions) and gross margin percentage: Year ended December 29, 2023 December 30, 2022 December 31, 2021 Segments Net Sales Gross Profit Gross Margin Net Sales Gross Profit Gross Margin Net Sales Gross Profit Gross Margin Fresh and value-added products $ 2,477.8 $ 167.3 6.8 % $ 2,581.8 $ 183.0 7.1 % $ 2,504.8 $ 180.2 7.2 % Banana 1,638.2 163.3 10.0 % 1,619.8 120.7 7.5 % 1,581.1 110.9 7.0 % Other products and services 204.7 20.1 9.8 % 240.7 36.5 15.2 % 166.1 12.7 7.6 % $ 4,320.7 $ 350.7 8.1 % $ 4,442.3 $ 340.2 7.7 % $ 4,252.0 $ 303.8 7.1 % Fresh and value-added products Net sales for 2023 were $2,477.8 million compared with $2,581.8 million in 2022.
Legal Proceedings and Note 16, “ Commitments and Contingencies ” to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data . Commitments and Contractual Obligations The following details information with respect to our contractual obligations as of December 30, 2022.
Legal Proceedings and Note 16, “ Commitments and Contingencies ” to the Consolidated Financial Statements included in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K. Commitments and Contractual Obligations The following details information with respect to our contractual obligations as of December 29, 2023.
During 2022, cost of products sold was positively impacted by approximately $59.5 million, primarily driven by fluctuations in exchange rates versus the euro, Costa Rican colon, British pound, Japanese yen, and Philippine peso. Income Taxes The provision for income taxes in 2022 was $20.1 million.
During 2023, cost of products sold was negatively impacted by approximately $40.0 million, primarily driven by fluctuations in exchange rates versus the Costa Rican colon, Mexican peso, euro and British pound. Income Taxes The provision for income taxes in 2023 was $18.1 million.
Partially offsetting the net cash used in investing activities in 2022 were proceeds from the sale of property, plant and equipment of $8.7 million, primarily relating to the sale of vacant land in Mexico and other assets in connection with our Optimization Program.
Net cash used in investing activities for 2022 primarily consisted of $48.1 million in capital expenditures and $9.7 million in investments in unconsolidated companies, partially offset by $8.7 million in proceeds from the sales of property, plant and equipment, primarily relating to the sale of vacant land in Mexico and other assets in connection with our Optimization Program.
We have agreements to purchase the entire or partial production of certain products of our independent growers primarily in Guatemala, Ecuador, Philippines, Costa Rica, Colombia, and United Kingdom that meet our quality standards.
We have agreements to purchase the entire or partial production of certain products of our independent growers primarily in Guatemala, Ecuador, Philippines, Costa Rica, Colombia, and United Kingdom that meet our quality standards. Total purchases under these agreements amounted to $631.6 million for 2023, $625.9 million for 2022, and $683.2 million for 2021.
As a result of seasonal sales price fluctuations, we have historically realized a greater portion of our net sales and gross profit during the first two calendar quarters of the year.
Our net sales are also dependent on our ability to supply a consistent volume and quality of fresh produce to the markets we serve. As a result of seasonal sales price fluctuations, we have historically realized a greater portion of our net sales and gross profit during the first two calendar quarters of the year.
Year ended December 30, 2022 December 31, 2021 January 1, 2021 Net sales $ 4,442.3 $ 4,252.0 $ 4,202.3 Gross profit 340.2 303.8 250.9 Selling, general and administrative expenses 186.8 192.9 196.2 Operating income 156.3 111.0 76.5 Net sales - Net sales for 2022 increased by $190.3 million, or 4%, when compared against 2021.
Year ended December 29, 2023 December 30, 2022 December 31, 2021 Net sales $ 4,320.7 $ 4,442.3 $ 4,252.0 Gross profit 350.7 340.2 303.8 Selling, general and administrative expenses 186.7 186.8 192.9 Operating income 58.5 156.3 111.0 Net sales - Net sales for 2023 were $4,320.7 million compared with $4,442.3 million in 2022.
While we do not operate in Ukraine and while our operations in Russia are de minimis, the conflict has exacerbated inflationary costs, supply chain and logistical pressures which have negatively impacted our business. In response to these persisting inflationary and cost pressures, we began instituting price increases on the majority of our products during the latter part of 2021.
While we do not operate in Ukraine and our operations in Russia are de minimis, the conflict has exacerbated inflationary costs, supply chain and logistical pressures which have negatively impacted our business.
Valuation allowances are established when it is deemed more likely than not that some portion or all of the deferred tax assets will not be realized.
Valuation allowances are established when it is deemed more likely than not that some portion or all of the deferred tax assets will not be realized. We review the realizability of our deferred tax asset valuation allowances on a quarterly basis or whenever events or changes in circumstances indicate that a review is required.
We assess goodwill at the reporting unit level on an annual basis as of the first day of our fourth quarter, or more frequently if events or changes in circumstances suggest that goodwill may not be recoverable. A significant amount of judgment is involved in determining if an indicator of impairment has occurred.
We assess goodwill at the reporting unit level on an annual basis as of the first day of our fourth quarter, or more frequently if events or changes in circumstances suggest that goodwill may not be recoverable. In performing our annual goodwill impairment test, we may start with an optional qualitative assessment as allowed for under the accounting guidance.
The change to a net asset position is due to the relative increase in variable interest rates when compared to the rates as of December 31, 2021. In connection with the Amendment of our Revolving Credit Facility, we amended our interest rate swaps to transition from LIBOR to Term SOFR effective January 3, 2023.
In connection with the Amendment of our Revolving Credit Facility, we amended our interest rate swaps to transition from LIBOR to Term SOFR effective January 3, 2023.
Certain definite-lived intangible assets related to our fresh and value-added products segment are sensitive to changes in estimated cash flows. To the extent that future developments result in estimated cash flows that are less than currently estimated levels, it could lead to impairment of these assets.
To the extent that future developments result in estimated cash flows that are less than currently estimated levels, it could lead to further impairment of these assets or other long-lived assets.
During 2021, capital expenditures related to the banana segment also included expansion of our operations in Panama. Capital expenditures related to the other products and services segment accounted for $3.9 million, or 8%, of our 2022 capital expenditures and $3.8 million, or 4%, of our 2021 capital expenditures.
Capital expenditures related to the other products and services segment accounted for $13.6 million, or 24%, of our 2023 capital expenditures and $3.9 million, or 8%, of our 2022 capital expenditures. During 2023 and 2022, these capital expenditures primarily related to improvements to our Jordanian poultry operations.
The increase in net sales was driven by higher per unit sales prices across all product categories, mainly due to inflation-justified price increases. The increase in net sales was partially offset by the negative impact of fluctuations in exchange rates in Europe and Asia, and lower net sales of fresh-cut vegetables and avocados as a result of lower sales volume.
The impact to net sales was driven by lower sales volume across most product categories, excluding pineapples and avocados which had higher volumes, lower avocado pricing due to prior-year pricing volatility, and the negative impact of fluctuations in exchange rates mainly in Asia and Europe, partially offset by higher per unit selling prices across most product categories.
If the banana and the prepared food reporting unit do not perform to expected levels, the related goodwill and the Del Monte ® trade names and trademarks associated with the prepared food reporting unit may be at risk for impairment in the future.
Although we believe that our estimates and judgments used in performing our impairment tests are reasonable, if our reporting units do not perform to expected levels, the related goodwill and the Del Monte ® trade names and trademarks may be at risk for additional impairment in the future.
Demand and shipping rates associated with our third-party ocean freight services may be impacted by increased shipping capacity availability in the market in future periods. LIQUIDITY AND CAPITAL RESOURCES Fresh Del Monte Produce Inc. is a holding company whose only significant asset is the outstanding capital stock of our subsidiaries that directly or indirectly own all of our assets.
LIQUIDITY AND CAPITAL RESOURCES Fresh Del Monte Produce Inc. is a holding company whose only significant asset is the outstanding capital stock of our subsidiaries that directly or indirectly own all of our assets. We conduct all of our business operations through our subsidiaries.
RESULTS OF OPERATIONS Consolidated Financial Results The following summarizes the more significant factors impacting our operating results for the fiscal year ended December 30, 2022 as compared with the fiscal year ended December 31, 2021.
Legal Proceedings , of this Annual Report on Form 10-K for more information regarding these matters. 36 Table of Contents RESULTS OF OPERATIONS Consolidated Financial Results For the Year Ended December 29, 2023, Compared to the Year Ended December 30, 2022 The following summarizes the more significant factors impacting our operating results for the fiscal year ended December 29, 2023 as compared with the fiscal year ended December 30, 2022.
The fair value of the banana reporting unit's goodwill, prepared reporting unit's goodwill and the Del Monte ® prepared food reporting unit’s trade names and trademarks are sensitive to differences between estimated and actual cash flows and changes in the related discount rate used to evaluate the fair value of these assets.
Management has identified the fair value of the banana reporting unit's goodwill, prepared reporting unit's goodwill and the Del Monte ® prepared foods reporting unit’s trade names and trademarks to be at a higher risk of sensitivity to differences between estimated and actual cash flows and changes in the related discount rate used to evaluate the fair value of these assets based on the percentage by which their respective fair value exceeded the carrying value as of the date of our annual impairment test.
Our primary uses of net cash flow are capital expenditures to increase our productivity and expand our product offerings and geographic reach.
Our principal uses of liquidity are paying the costs associated with our operations, paying dividends, and making capital expenditures to increase our productivity and expand our product offerings and geographic reach.
(U.S. dollars in millions) Contractual obligations by period Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years Fruit purchase agreements $ 1,009.3 $ 260.2 $ 516.1 $ 233.0 $ — Purchase obligations 230.4 204.9 10.6 3.4 11.5 Operating leases and charter agreements 257.5 53.7 84.4 67.6 51.8 Finance lease obligations 9.5 1.6 3.2 3.2 1.5 Long-term debt 539.8 — 539.8 — — Interest on long-term debt (1) 56.2 32.6 23.6 — — Retirement benefits 115.7 13.4 24.7 22.1 55.5 Uncertain tax positions 8.8 1.3 5.9 0.1 1.5 Totals $ 2,227.2 $ 567.7 $ 1,208.3 $ 329.4 $ 121.8 (1) We utilize a variable interest rate on our long-term debt, and for presentation purposes we have used an assumed average rate of 4.7%.
(U.S. dollars in millions) Contractual obligations by period Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years Fruit purchase agreements $ 1,189.2 $ 310.2 $ 576.0 $ 303.0 $ — Purchase obligations 222.2 191.7 15.2 3.6 11.7 Operating leases and charter agreements 238.5 59.5 75.1 51.8 52.1 Finance lease obligations 7.9 1.6 3.2 3.1 — Long-term debt (1) 400.0 — — — 400.0 Interest on long-term debt (2) 114.4 26.1 45.0 41.5 1.8 Retirement benefits 119.2 13.7 24.4 23.9 57.2 Uncertain tax positions 9.6 0.8 7.0 0.1 1.7 Totals $ 2,301.0 $ 603.6 $ 745.9 $ 427.0 $ 524.5 (1) Contractual obligations related to our long-term debt reflect the renewal of our Second A&R Credit Agreement dated February 21, 2024. 42 Table of Contents (2) We utilize a variable interest rate on our long-term debt, and for presentation purposes we have used an assumed average rate of 4.4%.
In the event that an asset is not recoverable, and the carrying amount of an asset exceeds the asset’s fair value, we measure and record an impairment loss for the excess. The fair value of an asset is measured by either determining the expected future discounted cash flows of the asset or by independent appraisal.
The fair value of an asset is measured by either determining the expected future discounted cash flows of the asset group or by independent appraisal.
Net Sales Our net sales are affected by numerous factors, including mainly the balance between the supply of and demand for our products and competition from other fresh produce companies. Our net sales are also dependent on our ability to supply a consistent volume and quality of fresh produce to the markets we serve.
Upon the closing of the sale of the Saudi Arabian assets in the first quarter of 2023, we completed the 2020 Optimization Program. Net Sales Our net sales are affected by numerous factors, including mainly the balance between the supply of and demand for our products and competition from other fresh produce companies.
These conditions, which have increased our production and distribution costs, have been driven by a multitude of external factors including the ongoing COVID-19 pandemic. Specifically, costs of packaging materials, fertilizers, labor, fuel, and ocean and inland freight have been significantly increasing, and continued to adversely affect our profitability and operating cash flows during 2022.
Specifically, costs of packaging materials, fertilizers, labor, fuel, and ocean and inland freight were significantly impacted, and continued to adversely affect our profitability and operating cash flows during 2022 and to a lesser extent during 2023.
Net sales during 2022 benefited from inflation-justified price increases. The increase in net sales was partially offset by lower sales volume, primarily in our banana and fresh and value-added products segments, and the negative impact of fluctuations in exchange rates primarily versus the euro, Japanese yen, Korean won and British pound compared with the prior-year period.
Net sales were primarily impacted by lower sales volumes and the negative impact of exchange rate fluctuations, primarily versus the Japanese yen, Korean won, and British pound compared with the prior-year periods. The negative impact of fluctuations in exchange rates was partially mitigated by our foreign currency hedges.
Due to the mix of unobservable inputs utilized, these measurements are usually classified as Level 3 in the fair value hierarchy. New Accounting Pronouncements For a description of new applicable accounting pronouncements, refer to Note 2, “ Summary of Significant Accounting Policies ” to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data .
New Accounting Pronouncements For a description of new applicable accounting pronouncements, refer to Note 2, “ Summary of Significant Accounting Policies ” to the Consolidated Financial Statements included in Part II, Item 8. Financial Statements and Supplementary Data . Off-Balance Sheet Arrangements We are not involved in any off-balance sheet arrangements. 45 Table of Contents
Additionally, certain of our contracts for key products include contractually indexed fuel and freight surcharges that vary depending on commodity pricing. We expect that these inflation-justified price increases and surcharges will continue to help mitigate our increased costs. Refer to the “ Results of Operations " section below, as well as Part I.
In response to these persisting inflationary and cost pressures, we instituted price increases on the majority of our products starting in the latter part of 2021. Additionally, certain of our contracts for key products include contractually indexed fuel and freight surcharges that vary depending on commodity pricing.
For a discussion of our 2021 Results of Operations, including a discussion of our financial results for the fiscal year ended December 31, 2021 compared to the fiscal year ended January1, 2021, refer to Part II, Item 7 of our annual report on Form 10-K filed with the SEC on February 23, 2022.
Results of Operations - For the Year Ended December 30, 2022, Compared to the Year Ended December 31, 2021 For a comparison of our results of operations for the year ended December 30, 2022, compared to the year ended December 31, 2021, see “ Part II, Item 7.
The increase in expense of $5.4 million was mainly driven by higher foreign currency related losses and the prior-year period including a gain related to fuel derivatives that were no longer designated as hedging instruments. Income tax provision - Income tax provision was $20.1 million in 2022 compared with $2.0 million in 2021.
Other expense, net - Other expense, net, was $19.3 million in 2023 compared with $14.8 million in 2022. The increase in expense of $4.5 million was mainly driven by higher foreign currency related losses. Income tax provision - Income tax provision was $18.1 million in 2023 compared with $20.1 million in 2022.
In addition, lower levels of accounts payable and accrued expenses contributed to the increase in working capital. 37 Table of Contents Investing activities Net cash used in investing activities was $49.1 million for 2022 compared with $82.5 million for 2021.
Partially offsetting this decrease in working capital was a decrease in (a) accounts payable and accrued expenses, (b) a higher cash balance on hand and (c) an increase in trade accounts receivable. 39 Table of Contents Investing activities Net cash provided by (used in) investing activities was $56.4 million for 2023 compared with $(49.1) million for 2022.
Net cash used in investing activities for 2022 primarily consisted of capital expenditures of $48.1 million and $9.7 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision.
The remaining $2.5 million, which includes $0.5 million of post-closing adjustments, will be received in three successive semi-annual installments. Partially offsetting the net cash provided by investing activities were capital expenditures of $57.7 million and $5.3 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision.
Selling, general and administrative expenses - Selling, general and administrative expenses decreased by $6.1 million, or 3%, when compared against the prior-year period, mainly as a result of lower advertising, promotional, and administrative expenses in the current year.
There were no other product-related charges in 2022. Selling, general and administrative expenses - Selling, general and administrative expenses decreased by $0.1 million when compared against the prior-year period.
The increase in working capital was mainly due to higher levels of (1) inventory, largely driven by inflationary cost increases and higher levels of key raw materials and packaging supplies in order to secure costs and availability, (2) assets held for sale, and (3) accounts receivable.
The decrease in working capital was mainly due to lower levels of (i) assets held for sale due to the end of the 2020 Optimization Program during 2023 and (ii) raw materials and packaging supplies inventory.
The increase in gross profit was driven by higher per unit sales prices and the absence of excess volume, partially offset by higher per unit production and distribution costs, including costs of packaging materials, fertilizers, and ocean and inland freight impacted by inflationary pressures.
Gross profit for 2023 increased 35.3% to $163.3 million from $120.7 million in 2022. The increase in gross profit was driven by higher net sales, specifically higher per unit selling prices and lower distribution costs, including ocean and inland freight.
Gross profit in the fresh and value-added products segment included $4.7 million of other product-related charges in 2021 comprised of $3.4 million in non-tropical fruit inventory write-offs related to inclement weather in Chile and a $1.3 million inventory write-off incurred in the Middle East. There were no other product-related charges in 2022.
Gross profit in the fresh and value-added products segment included $3.7 million of other product-related charges in 2023 primarily related to $1.5 million of inventory write-off due to the sale of two distribution centers in Saudi Arabia and $1.4 million of inventory write-off and clean-up cost, net of insurance recoveries, tied to the flooding of a seasonal production facility in Greece.
The increase in net sales was partially offset by lower sales volume and the negative impact of fluctuations in exchange rates in Europe and Asia. Gross profit for 2022 was $120.7 million compared to $110.9 million in 2021.
Gross profit for 2023 was $167.3 million compared with $183.0 million in 2022. Gross profit was negatively impacted by lower net sales and the negative fluctuations of exchange rates versus the Costa Rican colon and Mexican peso, partially offset by lower distribution, fuel, and ocean and inland freight costs.
We generally estimate the fair value of our indefinite-lived intangible assets using a discounted cash flow approach.
We generally estimate the fair value of our indefinite-lived intangible assets using a royalty savings method which estimates the value of trade names and trademarks by capitalizing the estimated royalties saved based on our ownership of the assets.
As of December 30, 2022, we were in compliance with all of the financial and other covenants contained in the Second A&R Credit Agreement. As of December 30, 2022, we had $388.6 million of borrowing availability under committed working capital facilities, primarily under the Revolving Credit Facility.
As of December 29, 2023, we were in compliance with all of the financial and other covenants contained in the Second A&R Credit Agreement. On February 21, 2024, we entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement (the "2024 Amended Credit Facility") which amends and restates the Second A&R Credit Agreement.
The decrease in net cash provided by operating activities was principally attributable to working capital fluctuations, including lower levels of accounts payable and accrued expenses, mainly due to the timing of period end payments to suppliers, and higher levels of accounts receivable, mainly driven by higher net sales in the current year.
The increase in net cash provided by operating activities was principally attributable to current year working capital fluctuations, primarily a reduction in inventories as compared to the prior year, largely driven by lower levels of purchases of key raw materials and packaging supplies in order to secure costs and availability during that period.
We are also experiencing pressure on our supply chain due to strained transportation capacity and lack of sufficient labor availability. In addition, the invasion of Ukraine by Russia in early 2022 led to further economic disruption.
We expect that these inflation-justified price increases and surcharges will continue to help mitigate our increased costs. In addition, in early 2022, the invasion of Ukraine by Russia led to further economic disruption.
We will continue to vigorously contest the adjustments and to exhaust all administrative and judicial remedies necessary in both jurisdictions to resolve the matters, which could be a lengthy process. 34 Table of Contents We regularly assess the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of our tax reserves.
We regularly assess the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of our tax reserves. Accordingly, we have not accrued any additional amounts based upon the proposed adjustments.
Gross profit increased by $23.8 million due to higher net sales of third-party ocean freight services as a result of higher volume and higher shipping rates. Due to these factors, gross margin increased to 15.2% from 7.6%.
Other products and services Net sales for 2023 were $204.7 million compared with $240.7 million in 2022 mainly due to lower net sales of third-party ocean freight services as a result of lower rates and volume driven by softened global demand. 38 Table of Contents Gross profit for 2023 was $20.1 million compared to $36.5 million in 2022 mainly due to lower net sales.
Partially offsetting the decrease were higher net income in the current year and higher purchases of raw materials inventory in the prior-year period. Working capital was $634.4 million at December 30, 2022 compared with $467.2 million at December 31, 2021, an increase of $167.2 million.
Partially offsetting the increase was lower levels of accounts payable and accrued expenses, mainly due to the timing of period end payments to suppliers. Working capital was $603.7 million at December 29, 2023 compared with $634.4 million at December 30, 2022, a decrease of $30.7 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeVarious factors could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results and performance to differ materially from those expressed in or implied by the forward-looking statements include, but are not limited to, the following: • disruptions or inefficiencies in our operations or supply chain; • the impact of inflation; • the duration and spread of the pandemic and related government restrictions and our ability to maintain the safety of our workforce; • our ability to successfully execute our long-term strategy; • the impact of governmental trade restrictions, including adverse governmental regulation that may impact our ability to access certain markets; • our anticipated cash needs in light of our liquidity; • the continued ability of our distributors and suppliers to have access to sufficient liquidity to fund their operations; • the impact of product and raw material supply and pricing, as well as prices for petroleum-based products and packaging materials; • the impact of pricing and other actions by our competitors, particularly during periods of low consumer confidence and spending levels; • trends and other factors affecting our financial condition or results of operations from period to period, including changes in product mix, consumer preferences or consumer demand for branded products such as ours; anticipated price and expense levels; 46 Table of Contents • the impact of crop disease, such as vascular diseases, one of which is known as Tropical Race 4, or TR4 (also known as Panama Disease); • our ability to improve our existing quarantine policies and other prevention strategies, as well as find contingency plans, to protect our and our suppliers’ banana crops from vascular diseases; • disruptions or issues that impact our production facilities or complex logistics network; • the availability of sufficient labor during peak growing and harvesting seasons; • the impact of foreign currency fluctuations; • inability to realize expected benefits on plans for expansion of our business (including through acquisitions); • our ability to successfully integrate acquisitions and new product lines into our operations; • the impact of impairment or other charges associated with exit activities, crop or facility damage or otherwise, • the timing and cost of resolution of pending and future legal and environmental proceedings or investigation; • the impact of changes in tax accounting or tax laws (or interpretations thereof), the impact of claims or adjustments proposed by the Internal Revenue Service or other taxing authorities in connection with our tax audits and our ability to successfully contest such tax claims and pursue necessary remedies; • the success of our joint ventures; • the impact of severe weather conditions and natural disasters, such as flooding and earthquakes, on crop quality and yields and on our ability to grow, procure or export our products; • the adequacy of our insurance coverage; • the cost and other implications of changes in regulations applicable to our business, including potential legislative or regulatory initiatives in the United States or elsewhere directed at mitigating the effects of climate change; • damage to our reputation or brand names or negative publicity about our products; • exposure to product liability claims and associated regulatory and legal actions, product recalls, or other legal proceedings relating to our business; • our ability to continue to comply with covenants and the terms of our credit instruments and our ability to obtain additional financing to fund our capital expenditures; • our ability to successfully implement our Optimization Program and to realize its expected benefits; and • our ability to successfully manage the risks associated with international operations, including risks relating to political or economic conditions, inflation, tax laws, currency restrictions and exchange rate fluctuations, legal or judicial systems.
Biggest changeVarious factors could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results and performance to differ materially from those expressed in or implied by the forward-looking statements include, but are not limited to, the following: • the impact of inflationary pressures on raw materials and other costs; • the impact of increased costs for many of our products, including bananas, pineapples, avocados and other fresh produce; • the impact of pricing and other actions by competitors, particularly during periods of low consumer confidence and spending levels; • our ability to successfully compete in the markets in which we do business; • the impact on our business of the consolidation of retailers, wholesalers and distributors in the food industry; • the impact of foreign currency fluctuations and currency exchange risks because of our international business; • the impact on our sales and profits if we lose one or more of our largest customers or such customers reduce their purchases from us; • the availability of sufficient labor during peak growing and harvesting seasons; • the continued ability of our distributors and suppliers to have access to sufficient liquidity to fund their operations; • the impact of governmental trade restrictions, including adverse governmental regulation that may impact our ability to access certain markets; • our anticipated cash needs in light of our liquidity; • trends and other factors affecting our financial condition or results of operations from period to period, including changes in product mix, consumer preferences or consumer demand for branded products such as ours; anticipated price and expense levels; • the impact of crop disease, such as vascular diseases, one of which is known as Tropical Race 4, or TR4 (also known as Panama Disease); • our ability to improve our existing quarantine policies and other prevention strategies, as well as find contingency plans, to protect our and our suppliers’ banana crops from vascular diseases; • global or local disruptions or issues that impact our production facilities or complex logistics network; • our inability to realize expected benefits on plans for expansion of our business (including through acquisitions); • our ability to successfully integrate acquisitions and new product lines into our operations; • the impact of impairment or other charges associated with exit activities, crop or facility damage or otherwise, • the timing and cost of resolution of pending and future legal and environmental proceedings or investigation; • the impact of changes in tax accounting or tax laws (or interpretations thereof), the impact of claims or adjustments proposed by the Internal Revenue Service or other taxing authorities, including the EU, in connection with our tax audits and our ability to successfully contest such tax claims and pursue necessary remedies; • the success of our joint ventures; • the impact of severe weather conditions and natural disasters, such as flooding and earthquakes, on crop quality and yields and on our ability to grow, procure or export our products; • the adequacy of our insurance coverage; • the cost and other implications of changes in regulations applicable to our business, including potential legislative or regulatory initiatives in the United States or elsewhere directed at mitigating the effects of climate change; • damage to our reputation or brand names or negative publicity about our products; 48 Table of Contents • exposure to product liability claims and associated regulatory and legal actions, product recalls, or other legal proceedings relating to our business; • our ability to continue to comply with covenants and the terms of our credit instruments and our ability to obtain additional financing to fund our capital expenditures; • our ability to successfully manage the risks associated with international operations, including risks relating to political or economic conditions, inflation, tax laws, currency restrictions and exchange rate fluctuations, legal or judicial systems.
Approximately 28% and 34% of our net sales and a significant portion of our costs and expenses in each of 2022 and 2021 were denominated 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.
Approximately 34% and 28% of our net sales and a significant portion of our costs and expenses in each of 2023 and 2022 were denominated 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.
Any public statements or disclosures made by us following this report that modify or impact any of the forward-looking statements contained in or accompanying this report will be deemed to modify or supersede such outlook or other forward-looking statements in or accompanying this report. 47 Table of Contents
Any public statements or disclosures made by us following this report that modify or impact any of the forward-looking statements contained in or accompanying this report will be deemed to modify or supersede such outlook or other forward-looking statements in or accompanying this report. 49 Table of Contents
Specifically, this annual report contains forward-looking statements including, but not limited to the following: • our beliefs regarding our market positions in our different product categories and the contributing factors to such market positions; • our beliefs regarding our opportunity to be a preferred supplier to large retail, convenience store chain, and food service customers and our methods to expand or establish such status; • our beliefs regarding the growth of the fresh-cut produce category and fresh produce industry and differentiation within the industry; • our expectation to continue investing in new product development to increase revenue and maintain our premium price position and market leadership in our product categories; • our beliefs regarding increases in outsourcing by food retailers, the drivers of that trend, and the beneficiaries of such increases; • our beliefs regarding our ability to leverage our existing distribution network and infrastructure to expand the market reach of our Mann Packing products; • our beliefs regarding our competitive advantages and the reasons for those advantages; • our beliefs and expectations of our ability to generate cost savings, expand our cargo business, and improve the quality of our products; • our beliefs regarding the barriers to entry in the pineapple and non-tropical fruit markets; • our expectations regarding the competitive pressures in the markets that we operate in; • our beliefs regarding our positioning to increase market share and our strategies to do so; • our beliefs regarding our principal competitive opportunities; • our beliefs regarding the materiality of our legal proceedings; • our beliefs regarding the benefits of diversity and inclusion within our workforce; • our beliefs related to the sufficiency of our capital resources; • our beliefs regarding the impacts of consolidation in our industry; • our beliefs regarding the adequacy of our insurance coverage; 45 Table of Contents • our beliefs regarding the sufficiency of our information technology protections and practices; • our expectations and estimates regarding certain legal, tax and accounting matters, including our litigation strategy, plans and beliefs regarding the ultimate outcome of income tax adjustments assessed by foreign taxing authorities; • our belief that certain proposed adjustments by taxing authorities are without merit, our ability to contest the adjustments and our plans to contest such adjustments; • our belief that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months; • our expectations regarding fluctuations in the financial performance of our business due to seasonality; • our plans and strategies to expand various categories of our business in our geographic markets; • our beliefs regarding opportunities for sales growth and development of our fresh and prepared food products in the Middle East, North Africa and Central Asian countries and the drivers of continued net sales growth across our segments; • our expectations and strategies for net sales growth in our respective geographic markets, including new product offerings and expansion of existing product offerings, increased sales volumes of existing products, expansion in various markets and targeting of convenience stores and foodservice trades in selected markets; • our expectation that a significant portion of our revenues will continue to be derived from a relatively small number of customers and our beliefs regarding the factors that go into the purchase decisions of such customers; • our expectations regarding the expansion of our third-party ocean freight services and other new logistic services to provide a meaningful contribution to our profitability and operating results; • our beliefs regarding compliance with applicable laws and regulations; • our expectations regarding our further equity investments in companies; • our beliefs regarding the increasing emphasis on food safety issues; • our expectations regarding expenditures for research and development; • our expectations regarding inflationary pressures and the impacts to our operating results; • our expectations relating to sales growth; • our plans regarding our Optimization Program, including our intention to sell identified assets and the anticipated value of such sales; • our expectations regarding estimated liabilities and expenditures related to environmental cleanup; • our expectations regarding voting practices of our principal shareholders; • our beliefs regarding trends in consumer demand and factors that provide differentiation; • our expectations regarding our derivative instruments, including our counterparties’ credit ratings and the anticipated impacts on our financial statements; • our expectations concerning the fair value of hedges, including the timing and impact to our results; and • our plans and future performance.
Specifically, this Annual Report on Form 10-K contains forward-looking statements including, but not limited to the following: • our beliefs regarding our market positions in our different product categories and the contributing factors to such market positions; • our beliefs regarding our opportunity to be a preferred supplier to large retail, convenience store chain, and food service customers and our methods to expand or establish such status; • our beliefs regarding the growth of the fresh-cut produce category and fresh produce industry and differentiation within the industry; • our expectation to continue investing in new product development to increase revenue and maintain our premium price position and market leadership in our product categories; • our beliefs regarding increases in outsourcing by food retailers, the drivers of that trend, and the beneficiaries of such increases; • our beliefs regarding our ability to leverage our existing distribution network and infrastructure to expand the market reach of our Mann Packing products; • our beliefs regarding our competitive advantages and the reasons for those advantages; • our beliefs and expectations of our ability to generate cost savings, expand our cargo business, and improve the quality of our products; • our beliefs regarding the barriers to entry in the pineapple and non-tropical fruit markets; • our expectations regarding the competitive pressures in the markets that we operate in; • our beliefs regarding our positioning to increase market share and our strategies to do so; • our beliefs regarding the materiality of our legal proceedings; • our beliefs regarding the benefits of diversity and inclusion within our workforce; • our beliefs related to the sufficiency of our capital resources; • our beliefs regarding the impacts of consolidation in our industry; • our beliefs regarding the adequacy of our insurance coverage; • our beliefs regarding the sufficiency of our information technology protections and practices; • our expectations and estimates regarding certain legal, tax and accounting matters, including our litigation strategy, plans and beliefs regarding the ultimate outcome of income tax adjustments assessed by foreign taxing authorities; • our belief that we will be successful in our contests of certain proposed adjustments by taxing authorities; • our belief that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations will be sufficient to service our outstanding debt during the next twelve months; • our expectations regarding fluctuations in the financial performance of our business due to seasonality; • our plans and strategies to expand various categories of our business in our geographic markets; • our beliefs regarding opportunities for sales growth and development of our fresh and prepared food products in the Middle East, North Africa and Central Asian countries and the drivers of continued net sales growth across our segments; • our expectations and strategies for net sales growth in our respective geographic markets, including new product offerings and expansion of existing product offerings, increased sales volumes of existing products, expansion in various markets and targeting of convenience stores and foodservice trades in selected markets; • our expectation that a significant portion of our revenues will continue to be derived from a relatively small number of customers and our beliefs regarding the factors that go into the purchase decisions of such customers; • our expectations regarding the expansion of our third-party ocean freight services and other new logistic services to provide a meaningful contribution to our profitability and operating results; 47 Table of Contents • our beliefs regarding compliance with applicable laws and regulations; • our expectations regarding our further equity investments in companies; • our beliefs regarding the increasing emphasis on food safety issues; • our expectations regarding capital expenditures in 2024, including for research and development; • our expectations regarding inflationary pressures and the impacts to our future operating results; • our expectations relating to sales growth; • our expectations regarding share repurchases; • our expectations regarding estimated liabilities and expenditures related to environmental cleanup; • our expectations regarding voting practices of our principal shareholders; • our beliefs regarding trends in consumer demand and factors that provide differentiation; • our expectations regarding our derivative instruments, including our counterparties’ credit ratings and the anticipated impacts on our financial statements; • our expectations concerning the fair value of hedges, including the timing and impact to our results; and • our strategic plans and future performance.
Item 1A., Risk Factors , of this Form 10-K for additional information regarding factors that could affect our results of operations, financial condition and liquidity.
Item 1A., Risk Factors , of this Annual Report on Form 10-K for additional information regarding factors that could affect our results of operations, financial condition and liquidity.
Special Note Regarding Forward-Looking Statements This annual report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Special Note Regarding Forward-Looking Statements This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The results of a hypothetical 10% strengthening in the average value of the dollar during 2022 and 2021 relative to the other currencies in which a significant portion of our net sales are denominated would have resulted in a decrease in net sales of approximately $126.0 million and $145.0 million for the years ended December 30, 2022 and December 31, 2021.
The results of a hypothetical 10% strengthening in the average value of the dollar during 2023 and 2022 relative to the other currencies in which a significant portion of our net sales are denominated would have resulted in a decrease in net sales of approximately $146.0 million and $126.0 million for the years ended December 29, 2023 and December 30, 2022.
A 10% increase in the interest rate for 2022 and 2021 would have resulted in a negative impact of approximately $2.8 million and $0.7 million on our results of operations for the years ended December 30, 2022 and December 31, 2021.
A 10% increase in the interest rate for 2023 and 2022 would have resulted in a negative impact of approximately $2.8 million on our results of operations for each of the years ended December 29, 2023 and December 30, 2022.
We had several foreign currency cash flow hedges outstanding, and the fair value of these hedges was a net liability of $6.7 million as of December 30, 2022 and $13.7 million as of December 31, 2021.
We had several foreign currency cash flow hedges outstanding, and the fair value of these hedges was a net liability of $0.3 million as of December 29, 2023 and $6.7 million as of December 30, 2022.
At year end December 30, 2022, the fair value of the interest rate swap contracts were in a net asset position of $15.8 million compared to a net liability position of $29.4 million as of December 31, 2021.
At year end December 29, 2023, the fair value of the interest rate swap contracts were in a net asset position of $7.9 million compared to a net asset position of $15.8 million as of December 30, 2022. 46 Table of Contents At December 29, 2023, the notional value of interest rate contracts outstanding was $400 million, with $200 million maturing in 2024 and the remaining $200 million maturing in 2028.
Changes in interest rates in our indebtedness could have a material effect on our financial statements. At year end December 30, 2022 and December 31, 2021, total variable rate debt had carrying values of $539.8 million and $519.1 million. The fair value of the debt approximates the carrying value because the variable rates approximate market rates.
At year end December 29, 2023 and December 30, 2022, total variable rate debt had carrying values of $400.0 million and $519.1 million. The fair value of the debt approximates the carrying value because the variable rates approximate market rates.
Our sensitivity analysis of the effects of changes in currency exchange rates does not factor in a potential change in sales levels or any offsetting gains on currency forward contracts. 44 Table of Contents Interest Rate Risk As described in Note 11, “ Debt ” to the Consolidated Financial Statements, our indebtedness is both variable and fixed rate.
Interest Rate Risk As described in Note 11, “ Debt ” to the Consolidated Financial Statements, our indebtedness is both variable and fixed rate. Changes in interest rates in our indebtedness could have a material effect on our financial statements.
This calculation assumes that each exchange rate would change in the same direction relative to the dollar.
This calculation assumes that each exchange rate would change in the same direction relative to the dollar. Our sensitivity analysis of the effects of changes in currency exchange rates does not factor in a potential change in sales levels or any offsetting gains on currency forward contracts.
Removed
At December 30, 2022, the notional value of interest rate contracts outstanding was $400 million, with $200 million maturing in 2024 and the remaining $200 million maturing in 2028.

Other FDP 10-K year-over-year comparisons