FRESH DEL MONTE PRODUCE INC

Previous wording

In addition, the invasion of Ukraine by Russia has led to further economic disruption and, 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 that negatively impacted our business. Similarly, recent shipping disruptions in the Red Sea and surrounding waterways have created logistical pressures that have negatively impacted our business, including impacts to the availability of certain shipping routes resulting in increased shipping times. We have taken actions to divert our shipping routes in order to minimize impacts on our business, however we may not be able to mitigate the impact of longer shipping routes if conditions deteriorate.

Current wording

In addition, the invasion of Ukraine by Russia has led to further economic disruption and, 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 that negatively impacted our business. Similarly, recent shipping disruptions in the Red Sea and surrounding waterways have created logistical pressures that have negatively impacted our business, including impacts to the availability of certain shipping routes resulting in increased shipping times. For example, during the second quarter of 2024, we recorded charges of $0.5 million related to shipments which were disrupted while travelling through the Red Sea. While we have taken actions to divert our shipping routes in order to minimize impacts on our business, we may not be able to mitigate the impact of additional write-offs or longer shipping routes if conditions deteriorate.

Previous wording

During fiscal 2020, we began a comprehensive review of our asset portfolio, which we continuously update, aimed at identifying non-strategic and underutilized assets to dispose of while reducing costs and driving further efficiencies in our operations (which we refer to as the "2020 Optimization Program"). 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. During the first three months of 2023, we completed the sales of various assets including two distribution centers and related assets in Saudi Arabia and an idle production facility in North America. Upon the closing of the sale of these assets in the first quarter of 2023, we completed the 2020 Optimization Program.

Current wording

During fiscal 2020, we began a comprehensive review of our asset portfolio, which we continuously update, aimed at identifying non-strategic and underutilized assets to dispose of while reducing costs and driving further efficiencies in our operations (which we refer to as the "2020 Optimization Program"). 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. During the first three months of 2023, we completed the sales of various assets including two distribution centers and related assets in Saudi Arabia and an idle production facility in North America. Upon the closing of the sale of these assets in the first quarter of 2023, we completed the 2020 Optimization Program. Under the 2020 Optimization Program, we generated cash proceeds of approximately $156.4 million from the sale of non-strategic and underutilized assets.

Previous wording

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 $174.1 million (including interest and penalties) for tax years 2012 through 2016. We strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities.

Current wording

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 $171.7 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.

Previous wording

In one of the foreign jurisdictions, we are currently contesting tax assessments related to the 2012-2015 audit years and the 2016 audit year in both the administrative court and the judicial court. During 2019 and 2020, we filed actions contesting the tax assessment in the administrative office. Our initial challenge to each of these tax assessments was rejected, and we subsequently lost our appeals at the administrative court. We have subsequently filed actions to contest each of these tax assessments in the country’s judicial courts. In addition, we have filed a request for injunction to the judicial court to stay the tax authorities' collection efforts for these two tax assessments, pending final judicial decisions. The court granted our injunction with respect to the 2016 audit year, however denied our injunction with respect to the 2012-2015 audit years. We timely appealed the denial of the injunction, and on August 10, 2022 the appellate court overturned the denial and granted our injunction for the 2012-2015 audit years. Pursuant to local law, we registered real estate collateral with an approximate fair market value of $7.3 million in connection with the grant of the 2016 audit year injunction. This real estate collateral has a net book value of $3.8 million as of the quarter ended March 29, 2024. 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 $30.3 million, and a net book value of $4.6 million as of the quarter ended March 29, 2024. The registration of this real estate collateral does not affect our operations in the country.

Current wording

In one of the foreign jurisdictions, we are currently contesting tax assessments related to the 2012-2015 audit years and the 2016 audit year in both the administrative court and the judicial court. During 2019 and 2020, we filed actions contesting the tax assessment in the administrative office. Our initial challenge to each of these tax assessments was rejected, and we subsequently lost our appeals at the administrative court. We have subsequently filed actions to contest each of these tax assessments in the country’s judicial courts. In addition, we have filed a request for injunction to the judicial court to stay the tax authorities' collection efforts for these two tax assessments, pending final judicial decisions. The court granted our injunction with respect to the 2016 audit year, however denied our injunction with respect to the 2012-2015 audit years. We timely appealed the denial of the injunction, and on August 10, 2022 the appellate court overturned the denial and granted our injunction for the 2012-2015 audit years. Pursuant to local law, we registered real estate collateral with an approximate fair market value of $6.9 million in connection with the grant of the 2016 audit year injunction. This real estate collateral has a net book value of $3.8 million as of the quarter ended June 28, 2024. 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 $29.0 million, and a net book value of $4.6 million as of the quarter ended June 28, 2024. The registration of this real estate collateral does not affect our operations in the country.

Previous wording

The following summarizes the more significant factors impacting our operating results for the 13-week periods ended March 29, 2024 (also referred to as the “first quarter of 2024”) and March 31, 2023 (also referred to as the “first quarter of 2023”).

Current wording

The following summarizes the more significant factors impacting our operating results for the 13-week periods and 26-week periods ended June 28, 2024 (also referred to as the “second quarter of 2024” and "first six months of 2024", respectively) and June 30, 2023 (also referred to as the “second quarter of 2023” and “first six months of 2023,” respectively).

Previous wording

Net sales - Net sales for the first quarter of 2024 was $1,107.9 million, compared with $1,128.5 million in the first quarter of 2023. The decrease in net sales was a result of lower banana net sales, driven by lower volume and pricing, and lower net sales in the other products and services segment. The decrease was partially offset by an increase in net sales in the fresh and value-added product segment, driven by higher overall sales volume and pricing in the segment.

Current wording

Net sales - Net sales for the second quarter of 2024 was $1,139.7 million, compared with $1,180.5 million in the second quarter of 2023, and $2,247.5 million for the first six months of 2024 compared with $2,309.0 million for the first six months of 2023. The decrease in net sales for both periods was primarily due to lower banana net sales, driven by lower sales volume and per unit selling prices. The decrease was partially offset by an increase in net sales in the fresh and value-added product segment driven by higher pricing.

Previous wording

Gross profit for the first quarter of 2024 included $(1.0) million of other product-related credits comprised primarily of $2.2 million of insurance recoveries associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023, partially offset by $1.2 million of severance charges from the outsourcing of certain functions of our fresh and value-added operations. In the first quarter of 2023, gross profit included $1.8 million of other product-related charges related inventory write-offs due to the sale of two distribution centers in the Middle East.

Current wording

Gross profit for the second quarter of 2024 included $1.2 million of other product-related charges primarily related to charges of $0.5 million related to shipment disruptions in the Red Sea and $0.5 million in additional clean-up costs associated with the flooding of a seasonal production facility in Greece during the third quarter of 2023. For the first six months of 2024, gross profit included other product-related charges of $0.2 million, primarily related to the above mentioned charges and $1.2 million of severance charges from the outsourcing of certain functions of our fresh and value-added operations, partially offset by $2.2 million related to insurance recoveries associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023. There were no product-related charges during the second quarter of 2023. Gross profit in the first six months of 2023 included $1.8 million of other product-related charges mostly consisting of inventory write-offs in connection with the sale of two distribution centers in Saudi Arabia.

Previous wording

Selling, general and administrative expenses - Selling, general and administrative expenses for the first quarter of 2024 increased by $3.1 million, or 7%, when compared with the first quarter of 2023, primarily due to higher professional fees in North America and higher payroll, marketing and promotional activities in Europe and Africa, partially offset by a reduction in amortization of definite lived intangible assets due to the impairment of the carrying value of customer relationships and trade name intangible assets during the fourth quarter of 2023.

Current wording

Selling, general and administrative expenses - Selling, general and administrative expenses for the second quarter of 2024 increased by $3.1 million, or 7%, when compared with the second quarter of 2023, and increased $6.1 million, or 6%, in the first six months of 2024 when compared with the first six months of 2023. The increase in both periods was primarily due to higher employee benefit and professional fees, primarily in North America and higher payroll, marketing and promotional activities in Europe and Africa, partially offset by a reduction in amortization of definite lived intangible assets due to the impairment of the carrying value of customer relationships and trade name intangible assets during the fourth quarter of 2023.

Previous wording

Gain on disposal of property, plant and equipment, net - The gain on disposal of property, plant and equipment, net for the first quarter of 2024 of $14.8 million primarily consisted of the sale of two idle facilities in South America. The gain on disposal of property, plant and equipment, net for the first quarter of 2023 primarily related to a $20.5 million gain on the sale of two distribution centers and related assets in Saudi Arabia and a $6.8 million gain on the sale of an idle production facility in North America.

Current wording

Gain on disposal of property, plant and equipment, net and subsidiary - The gain on disposal of property, plant and equipment, net and subsidiary for the second quarter of 2024 of $3.6 million primarily consisted of the sale of a warehouse in Europe. For the first six months of 2024, gain on disposal of property, plant and equipment, net and subsidiary of $18.3 million also included a $14.7 million gain on the sale of two idle facilities in South America.

Previous wording

Asset impairment and other charges, net - Asset impairment and other charges, net of $2.3 million in the first quarter of 2024 primarily consisted of the accrual of a settlement agreement with respect to a litigation matter by a former employee, net of insurance reimbursements.

Current wording

Asset impairment and other (credits) charges, net - Asset impairment and other (credits) charges, net of $(1.3) million in the second quarter of 2024 primarily consisted of an insurance reimbursement related to fire damages at a warehouse in South America during the fourth quarter of 2023, partially offset by impairment charges of banana-related fixed assets in the Philippines. For the first six months of 2024, asset impairment and other (credits) charges, net of $1.0 million also included accruals related to (i) a settlement agreement with respect to a litigation matter by a former employee, net of insurance reimbursements and (ii) a reserve recorded due to a potential liability arising from our third-party logistics operations.

Previous wording

Asset impairment and other charges, net of $2.4 million during the first quarter of 2023 consisted of expenses incurred in connection with a cybersecurity incident that occurred during early 2023. The incident temporarily impacted certain of our operational and information technology systems. We were able to promptly recover our critical operational data and business systems and accordingly, the incident did not have a material impact on our financial results for the first quarter of 2023. However, we did incur incremental costs primarily related to the engagement of specialized legal counsel and other incident response advisors.

Current wording

Asset impairment and other (credits) charges, net of $4.6 million in the second quarter of 2023 primarily consisted of impairment charges related to low productivity grape vine plantations in South America and idle land in Central America. In addition, the second quarter and first six months of 2023 also included expenses incurred in connection with a cybersecurity incident which occurred during the first quarter of 2023. The incident temporarily impacted certain of our operational and information technology systems resulting in incremental costs primarily related to the engagement of specialized legal counsel and other incident response advisors.

Previous wording

Operating income -Operating income decreased by $30.4 million in the first quarter of 2024 when compared with first quarter of 2023, primarily due to lower gross profit and a higher gain on disposal of property, plant and equipment, net in the prior-year period.

Current wording

Operating income -Operating income decreased by $3.9 million in the second quarter of 2024 and decreased by $34.3 million in the first six months of 2024 when compared with the prior-year periods. The decrease in operating income was primarily due to lower gross profit and a higher gain on sale of assets in the prior-year period. The decrease was partially offset by higher asset impairment and other charges in the prior year period.

Previous wording

Interest expense -Interest expense was $5.2 million for the first quarter of 2024, compared with $8.0 million for the first quarter of 2023 due to lower average debt balances.

Current wording

Interest expense -Interest expense was lower in the second quarter and first six months of 2024 when compared with the respective prior-year periods due to lower average debt balances, partially offset by higher interest rates.

Previous wording

Income tax provision - Income tax provision was $5.3 million for the first quarter of 2024 compared with $9.5 million for the first quarter of 2023. The decrease in the income tax provision in the first quarter of 2024 was primarily due to decreased earnings in certain higher tax jurisdictions.

Current wording

Income tax provision - Income tax provision increased to $12.3 million for the second quarter of 2024 compared with $11.3 million for the second quarter of 2023 primarily due to increased earnings in certain higher tax jurisdictions partially offset by the prior year tax effects related to the sale of stock of a subsidiary and asset sales in Saudi Arabia and North America. Income tax provision decreased to $17.6 million for the first six months of 2024 compared with $20.9 million for the first six months of 2023. The decrease in the income tax provision was primarily due to decreased earnings in certain higher tax jurisdictions combined with the prior year tax effects related to the sale of stock of a subsidiary and asset sales in Saudi Arabia and North America.

Previous wording

Gross profit for the first quarter of 2024 was $55.9 million, compared with $47.1 million in the prior-year period. Gross profit variance was primarily driven by overall higher net sales partially offset by higher production and procurement costs of pineapple and avocados, including the negative impact of fluctuations in exchange rates primarily due to a stronger Costa Rican colon and Mexican peso.

Current wording

Gross profit for the second quarter of 2024 was $77.9 million, compared with $62.1 million in the prior-year period. The increase in gross profit was primarily driven by higher per unit selling prices partially offset by higher per unit production and procurement costs of avocados and the negative impact of fluctuations in exchange rates primarily due to a stronger Costa Rican colon and Mexican peso.

Previous wording

Gross profit for the first quarter of 2024 was $21.8 million, compared with $43.2 million in the prior-year period as a result of the lower net sales, higher per unit production and procurement costs and the negative fluctuation in exchange rates in Costa Rican colon, partially offset by lower distribution and ocean freight cost. Gross margin decreased to 5.7% compared with 10.2% in the prior-year period.

Current wording

Gross profit for the second quarter of 2024 was $29.8 million, compared with $50.5 million in the prior-year period. The decrease in gross profit was principally driven by lower net sales, higher per unit production and procurement costs, and the negative impact of fluctuations in exchange rates due to a stronger Costa Rican colon, partially offset by lower distribution and ocean freight costs. Gross margin decreased to 7.6% compared with 11.3% in the prior-year period.

Previous wording

First Quarter of 2024 Compared with First Quarter of 2023

Current wording

First Six Months of 2024 Compared with First Six Months of 2023

Previous wording

Net sales for the first quarter of 2024 were $676.8 million, compared with $643.4 million in the prior-year period, primarily as a result of higher sales volume of pineapples, melons, and prepared foods and higher per unit selling prices of avocados, partially offset by lower net sales of fresh-cut fruit due to lower sales volumes.

Current wording

Net sales for the first six months of 2024 were $1,370.8 million, compared with $1,321.0 million in the prior-year period. The increase in net sales was primarily a result of higher sales volume of pineapples and melons, and higher per unit selling prices of avocados and non-tropical fruit. These increases were partially offset by lower net sales of fresh-cut fruit due to lower sales volumes.

Previous wording

Gross profit for the first quarter of 2024 included $(1.0) million of other product-related credits comprised primarily of $2.2 million of insurance recoveries associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023, partially offset by $1.2 million of severance charges from the outsourcing of certain functions of our fresh and value-added operations. In the first quarter of 2023, gross profit included $1.7 million of other product-related charges related inventory write-offs due to the sale of two distribution centers in the Middle East. Gross margin increased to 8.3% compared with 7.3% in the prior-year period.

Current wording

Gross profit for the first six months of 2024 included $0.2 million of other product-related charges comprised primarily $1.2 million of severance charges from the outsourcing of certain functions of our fresh and value-added operations and $0.5 million of charges related to shipment disruptions in the Red Sea, partially offset by $1.6 million of insurance recoveries, net of expenses, associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023. Gross profit for the first six months of 2023 included $1.7 million of other product-related charges comprised of inventory write-offs due to the sale of two distribution centers in the Saudi Arabia. Gross margin increased to 9.8% compared with 8.3% in the prior-year period.

Previous wording

Net sales for the first quarter of 2024 were $379.5 million, compared with $425.1 million in the prior-year period, primarily as a result of lower volume due partially to service level issues in the first two months of the year and lower selling prices due to competitive market pressures in North America and Europe.

Current wording

Net sales for the first six months of 2024 were $773.8 million, compared with $873.9 million in the prior-year period. The decrease in net sales was primarily a result of lower volume in North America due to competitive market pressures and service level issues in the first two months of the year, and lower sales volume and per unit selling prices in Asia due to a decrease in supply from the Philippines and the negative impact of fluctuations in exchange rates primarily due to a weaker Japanese yen.

Previous wording

Net sales for the first quarter of 2024 were $51.6 million, compared with $60.0 million in the prior-year period, primarily due to lower net sales of third-party ocean freight services as a result of lower rates driven by a competitive market environment and the sale of our plastics subsidiary in the prior-year period.

Current wording

Net sales for the first six months of 2024 were $102.9 million, compared with $114.1 million in the prior-year period. The decrease in net sales was primarily due to the sale of our plastics subsidiary during the prior-year period and lower net sales of our third-party ocean freight services as a result of lower rates driven by a competitive market environment.

Previous wording

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. Accordingly, as of March 29, 2024, our principal sources of liquidity were (i) cash generated from operations of our subsidiaries, (ii) our combined $806 million of credit facilities, including $750 million associated with our recently amended senior unsecured revolving credit facility, with an available capacity of approximately $379 million and (iii) existing cash and cash equivalents of $42.2 million. The loan commitments under our credit facilities can be used for working capital or other general corporate purposes. On a long-term basis, we will continue to rely on our credit facilities for any long-term funding not provided by cash generated from operations of our subsidiaries.

Current wording

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. Accordingly, as of June 28, 2024, our principal sources of liquidity were (i) cash generated from operations of our subsidiaries, (ii) our combined $806 million of credit facilities, including $750 million associated with our amended senior unsecured revolving credit facility, with an available capacity of approximately $499 million and (iii) existing cash and cash equivalents of $37.8 million. The loan commitments under our credit facilities can be used for working capital or other general corporate purposes. On a long-term basis, we will continue to rely on our credit facilities for any long-term funding not provided by cash generated from operations of our subsidiaries.

Previous wording

Net cash provided by operating activities was $18.7 million for the first three months of 2024 compared with $15.5 million for the first three months of 2023, an increase of $3.2 million. The increase was primarily attributable to working capital fluctuations, mainly driven by higher levels of accounts payable and accrued expenses and lower inventory levels due to optimization efforts around working capital, partially offset by a lower net income during the first three months of 2024 as compared to the first three months of 2023.

Current wording

Net cash provided by operating activities was $143.7 million for the first six months of 2024 compared with $132.7 million for the first six months of 2023, an increase of $11.0 million. The increase was primarily attributable to working capital fluctuations, mainly driven by higher levels of accounts payable and accrued expenses, mainly driven by the timing of period end payments to suppliers, and lower levels of accounts receivable driven by the timing of collections of accounts receivable. The impact of these changes were partially offset by lower net income during the first six months of 2024 as compared to the first six months of 2023.

Previous wording

At March 29, 2024, we had working capital of $634.3 million, compared with $603.7 million at December 29, 2023, an increase of $30.6 million. The increase in working capital was primarily due to (i) higher levels of accounts receivable mainly driven by seasonal variations, (ii) higher balance of cash on hand due the timing of asset sales during the first quarter of 2024, and (iii) an increase in assets held for sale. Partially offsetting the increase in working capital was (a) a decrease in growing crop inventory, primarily due to seasonal variations and (b) higher levels of accounts payable and accrued expenses due to the timing of payments near period end.

Current wording

At June 28, 2024, we had working capital of $572.2 million, compared with $603.7 million at December 29, 2023, a decrease of $31.5 million. The decrease in working capital was primarily due to (i) a decrease in growing crop and finished goods inventory, primarily due to seasonal variations and (ii) an increase in income taxes and other taxes payable due to increased earnings in certain higher tax jurisdictions in the current period. Partially offsetting the decrease in working capital was (a) higher levels of trade accounts receivable due to seasonal variations and (b) lower levels of accounts payable and accrued expenses, mainly driven by the timing of period end payments to suppliers.

Previous wording

Net cash provided by investing activities for the first three months of 2024 was $3.9 million, compared with net cash provided by investing activities of $79.6 million for the first three months of 2023. Net cash provided by investing activities for the first three months of 2024 primarily consisted of proceeds from the sale of property, plant and equipment of $20.1 million which mainly related to the sale of two facilities in South America and installment payments received from the sale of our plastics business subsidiary in South America during 2023.

Current wording

Net cash provided by investing activities for the first six months of 2024 was $1.6 million, compared with net cash provided by investing activities of $73.7 million for the first six months of 2023. Net cash provided by investing activities for the first six months of 2024 primarily consisted of proceeds from the sale of property, plant and equipment of $21.1 million which mainly related to the sale of two facilities in South America, insurance recoveries received for damage to property, plant and equipment of $5.7 million primarily associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023, and installment payments received from the sale of our plastics business subsidiary in South America during the prior year.

Previous wording

Partially offsetting the net cash provided by investing activities for the first three months of 2024 were capital expenditures of $12.7 million which mainly included expenditures related to investments in our operations and production facilities in North America benefiting both our fresh and value-added products and banana segments, including expenditures related to automation and technology initiatives and improvements to our pineapple operations in Kenya. Net cash provided by investing activities for the first three months of 2024 also reflects $3.5 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision.

Current wording

Partially offsetting the net cash provided by investing activities for the first six months of 2024 were capital expenditures of $20.7 million which mainly included expenditures related to investments in our operations and production facilities in North America benefiting both our fresh and value-added products and banana segments, including expenditures related to automation and technology initiatives, and improvements to our pineapple operations in Kenya. Net cash provided by investing activities for the first six months of 2024 is also offset by $4.5 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision.

Previous wording

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

Current wording

Net cash provided by investing activities for the first six months of 2023 primarily consisted of proceeds from the sale of property, plant and equipment of $96.8 million which mainly related to the sales of two distribution centers in Saudi Arabia and an idle production facility in North America, and land assets in South and Central America. Partially offsetting the net cash provided by investing activities were capital expenditures of $18.9 million which mainly related to (i) improvements to our pineapple operations in Central America and Kenya, (ii) investments in our operations and production facilities in North America benefiting both our fresh and value-added products and banana segments, including expenditures related to automation and technology initiatives, and (iii) improvements to our value-added production facilities in Europe and the Middle East. Net cash used in investing activities for the first six months of 2023 also reflects $3.7 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision.

Previous wording

Net cash used in financing activities for the first three months of 2024 was $16.0 million, compared with $75.9 million for the first three months of 2023. Net cash used in financing activities for the first three months of 2024 primarily consisted of dividends paid of $11.9 million and the payment of deferred financing costs of $2.1 million.

Current wording

Net cash used in financing activities for the first six months of 2024 was $144.3 million, compared with $180.2 million for the first six months of 2023. Net cash used in financing activities for the first six months of 2024 primarily consisted of net repayments on debt of $115.0 million and dividends paid of $23.9 million.

Previous wording

As of March 29, 2024, we had $379.4 million unused borrowing capacity, net of letters of credit and guarantees, primarily under the 2024 Amended Credit Facility.

Current wording

As of June 28, 2024, we had $499.3 million unused borrowing capacity, net of letters of credit and guarantees, primarily under the 2024 Amended Credit Facility.

Previous wording

A discussion of our critical accounting policies and estimates can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K for the fiscal year ended December 29, 2023. There were no material changes to these critical accounting policies or estimates during the first quarter of 2024.

Current wording

A discussion of our critical accounting policies and estimates can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K for the fiscal year ended December 29, 2023. There were no material changes to these critical accounting policies or estimates during the second quarter of 2024.

Previous wording

Our results of operations and financial condition are exposed to fluctuations in currency exchange rates against the U.S. dollar, and we mitigate that exposure by entering into foreign currency forward contracts. Certain of our subsidiaries periodically enter into foreign currency forward contracts in order to hedge portions of forecasted sales or cost of sales denominated in foreign currencies which generally expire within one year. During the quarter ended March 29, 2024, we entered into a foreign currency collar contract to hedge portions of our cost of sales denominated in the Kenyan shilling. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. The fair value of our foreign currency cash flow hedges was a net asset position of $1.2 million as of March 29, 2024 compared to a net liability position of $0.3 million as of December 29, 2023 due to the relative strengthening or weakening of exchange rates when compared to contracted rates.

Current wording

Our results of operations and financial condition are exposed to fluctuations in currency exchange rates against the U.S. dollar, and we mitigate that exposure by entering into foreign currency forward contracts. Certain of our subsidiaries periodically enter into foreign currency forward contracts in order to hedge portions of forecasted sales or cost of sales denominated in foreign currencies which generally expire within one year. During the quarter ended June 28, 2024, we entered into a foreign currency collar contract to hedge portions of our cost of sales denominated in the Kenyan shilling. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. The fair value of our foreign currency cash flow hedges was a net asset position of $1.8 million as of June 28, 2024 compared to a net liability position of $0.3 million as of December 29, 2023 due to the relative strengthening or weakening of exchange rates when compared to contracted rates.

Previous wording

Our results of operations and financial condition are exposed to fluctuations in variable interest rates, and we mitigate that exposure by entering into interest rate swaps from time to time. During 2018, we entered into interest rate swaps in order to hedge the risk of the fluctuation on future interest payments related to a portion of our variable rate borrowings through 2028. The fair value of our interest rate swap cash flow hedges was an asset position of $9.9 million as of March 29, 2024 compared to an asset position of $7.9 million as of December 29, 2023. The change in value was due to the relative increase in variable interest rates when compared to the rates as of December 29, 2023. In December 2022 in connection with the amendment of our revolving credit facility, we amended our interest rate swaps to transition from LIBOR to Term SOFR effective January 3, 2023.

Current wording

Our results of operations and financial condition are exposed to fluctuations in variable interest rates, and we mitigate that exposure by entering into interest rate swaps from time to time. During 2018, we entered into interest rate swaps in order to hedge the risk of the fluctuation on future interest payments related to a portion of our variable rate borrowings through 2028. The fair value of our interest rate swap cash flow hedges was an asset position of $9.1 million as of June 28, 2024 compared to an asset position of $7.9 million as of December 29, 2023. The change in value was due to the relative increase in variable interest rates when compared to the rates as of December 29, 2023. Subsequent to June 28, 2024, we agreed to terminate our outstanding interest rate swap in exchange for $7.3 million, net of fees of approximately $0.2 million.

Previous wording

We enter into derivative instruments with counterparties that are highly rated and do not expect a deterioration of our counterparty’s credit ratings; however, the deterioration of our counterparty’s credit ratings would affect the Consolidated Financial Statements in the recognition of the fair value of the hedges that would be transferred to earnings as the contracts settle. We expect that $5.2 million of the net fair value of our cash flow hedges recognized as a net gain in accumulated other comprehensive loss will be transferred to earnings during the next 12 months and the remaining net gain of $4.9 million over a period of approximately 5 years, along with the earnings effect of the related forecasted transactions.

Current wording

We enter into derivative instruments with counterparties that are highly rated and do not expect a deterioration of our counterparty’s credit ratings; however, the deterioration of our counterparty’s credit ratings would affect the Consolidated Financial Statements in the recognition of the fair value of the hedges that would be transferred to earnings as the contracts settle. We expect that $5.7 million of the net fair value of our cash flow hedges recognized as a net gain in accumulated other comprehensive loss, inclusive of amounts related to our interest rate swap terminated subsequent to June 28, 2024, will be transferred to earnings during the next 12 months and the remaining net gain of $5.0 million over a period of approximately 4 years, along with the earnings effect of the related forecasted transactions.

Previous wording

•our expectation regarding the exploration of strategic alternatives for our Mann Packing business

Current wording

•our expectation regarding the exploration and timing of strategic alternatives for our Mann Packing business