FRESH DEL MONTE PRODUCE INC

Previous wording

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. Fiscal year 2021 had 52 weeks and ended on December 31, 2021.

Current wording

Our fiscal year end is the last Friday of the calendar year, unless the first Friday subsequent to the end of the calendar year is January 1st (in which case our year end is January 1st). Fiscal year 2024 had 52 weeks and ended on December 27, 2024. Fiscal year 2023 had 52 weeks and ended on December 29, 2023. Fiscal year 2022 had 52 weeks and ended on December 30, 2022.

Previous wording

Current Macroeconomic Environment and Inflation Impact

Current wording

Current Macroeconomic Environment and Geopolitical Environment

Previous wording

Starting in fiscal year 2021, we began experiencing inflationary and cost pressures due to volatility and disruption in the global economy. These conditions, which increased our production and distribution costs, were driven by a multitude of external factors including rising interest rates, restrictions and economic impacts related to the COVID-19 pandemic, currency fluctuations, supply chain disruptions and geopolitical conflicts. 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.

Current wording

Starting in fiscal year 2021, we began experiencing inflationary and cost pressures due to volatility and disruption in the global economy. These conditions, which increased our production and distribution costs, were driven by a multitude of external factors including rising interest rates, restrictions and economic impacts related to the COVID-19 pandemic, currency fluctuations, supply chain disruptions and geopolitical conflicts. 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 and 2024.

Previous wording

Based on the stabilization of inflation in certain key markets during the latter part of 2023, we do not anticipate further inflation-justified price increases and surcharges. We are actively monitoring region-specific macroeconomic factors to mitigate increases in our costs, if necessary.

Current wording

Based on the stabilization of inflation in certain key markets during the latter part of 2023, we have not established further inflation-justified price increases and surcharges in 2024. We are actively monitoring region-specific macroeconomic factors to mitigate increases in our costs, if necessary.

Previous wording

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. 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. For example, seasonal variations in demand for bananas as a result of increased supply and competition from other fruit are reflected in the seasonal fluctuations of banana prices, with the first six months of each year generally exhibiting stronger demand and higher prices, except in those years where an excess supply exists. In our fresh and value-added products segment, there are seasonal variations in sales of our non-tropical fruit products which reach peak sales season from October to May. 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.

Current wording

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. 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. For example, seasonal variations in demand for bananas as a result of increased supply and competition from other fruit are reflected in the seasonal fluctuations of banana prices, with the first six months of each year generally exhibiting stronger demand and higher prices, except in those years where an excess supply exists. In our fresh and value-added products segment, there are seasonal variations in sales of our non-tropical fruit products which reach peak sales season from October to May. 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 years 2023 and 2024.

Previous wording

Since our financial reporting currency is the U.S. dollar, our net sales are significantly affected by fluctuations in the value of the currency in which we conduct our sales versus the dollar, with a weaker dollar versus such currencies resulting in increased net sales in dollar terms. 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.

Current wording

Since our financial reporting currency is the U.S. dollar, our net sales are significantly affected by fluctuations in the value of the currency in which we conduct our sales versus the dollar, with a weaker dollar versus such currencies resulting in increased net sales in dollar terms. Including the effect of our foreign currency hedges, net sales in 2024 were negatively impacted by $19.0 million primarily due to fluctuations in exchange rates versus the Japanese yen and Korean won.

Previous wording

Since our financial reporting currency is the U.S. dollar, our costs are affected by fluctuations in the value of the currency in which we have significant operations versus the dollar, with lower cost resulting from a stronger U.S. dollar. 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.

Current wording

Since our financial reporting currency is the U.S. dollar, our costs are affected by fluctuations in the value of the currency in which we have significant operations versus the dollar, with lower cost resulting from a stronger U.S. dollar. During 2024, cost of products sold was negatively impacted by approximately $8 million, primarily driven by fluctuations in exchange rates versus the Costa Rican colon.

Previous wording

The provision for income taxes in 2023 was $18.1 million. Income taxes consist of the consolidation of the tax provisions, computed on a separate entity basis, in each country in which we have operations. Since we are a non-U.S. company with substantial operations outside the United States, a substantial portion of our results of operations is not subject to U.S. taxation. Several of the countries in which we operate have lower tax rates than the United States. We are subject to U.S. taxation on our operations in the United States. From time to time, tax authorities in various jurisdictions in which we operate audit our tax returns and review our tax positions. There are audits presently pending in various countries. There can be no assurance that any tax audits, or changes in existing tax laws or interpretations in countries in which we operate will not result in an increased effective tax rate for us.

Current wording

The provision for income taxes in 2024 was $29.1 million. Income taxes consist of the consolidation of the tax provisions, computed on a separate entity basis, in each country in which we have operations. Since we are a non-U.S. company with substantial operations outside the United States, a substantial portion of our results of operations is not subject to U.S. taxation. Several of the countries in which we operate have lower tax rates than the United States. We are subject to U.S. taxation on our operations in the United States. From time to time, tax authorities in various jurisdictions in which we operate audit our tax returns and review our tax positions. There are audits presently pending in various countries. There can be no assurance that any tax audits, or changes in existing tax laws or interpretations in countries in which we operate will not result in an increased effective tax rate for us.

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 $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.

Current wording

In connection with the examination of the tax returns in three foreign jurisdictions, the taxing authorities have issued income tax deficiencies primarily related to transfer pricing aggregating approximately $231.9 million (including interest and penalties) for tax years 2012 through 2021. We strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities.

Previous wording

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.

Current wording

The following summarizes the more significant factors impacting our operating results for the fiscal year ended December 27, 2024 as compared with the fiscal years ended December 29, 2023 and December 30, 2022.

Previous wording

Net sales - Net sales for 2023 were $4,320.7 million compared with $4,442.3 million in 2022. 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. These were partially offset by higher per unit selling prices of banana and fresh and value-added products segments.

Current wording

Net sales - Net sales for 2024 were $4,280.2 million compared with $4,320.7 million in 2023. Net sales were primarily impacted by lower sales volumes and per unit selling prices of banana and the negative impact of exchange rate fluctuations, primarily versus the Japanese yen and Korean won compared with the prior-year period. These were partially offset by higher per unit selling prices and sales volume in our fresh and value-added products segment, primarily related to avocado and pineapple.

Previous wording

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. There were no other product-related charges in 2022.

Current wording

Gross profit for 2024 included $1.0 million of other product-related charges primarily related to $1.2 million of severance charges from the outsourcing of certain functions of our fresh and value-added operations, $1.0 million of additional logistic costs and inventory write-offs incurred as a result of Hurricane Beryl during July 2024, partially offset by $1.7 million related to insurance recoveries associated with the flooding of a production facility in Greece during 2023. Gross profit for 2023 included $3.8 million of other product-related charges 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 in Greece.

Previous wording

Selling, general and administrative expenses -Selling, general and administrative expenses decreased by $0.1 million when compared against the prior-year period.

Current wording

Selling, general and administrative expenses -Selling, general and administrative expenses increased by $10.2 million when compared with the prior-year period. The increase was primarily due to higher employee benefits, marketing and promotional activities in North America and Europe and administrative costs associated with the creation of our biomass initiatives during 2024, partially offset by a reduction in amortization due to the impairment of customer relationships and trade name intangible assets during the fourth quarter of 2023.

Previous wording

Gain (loss) on disposal of property, plant and equipment, net and subsidiary -The gain on disposal of property, plant and equipment, net and subsidiary of $37.9 million during 2023 primarily related to the sales of two distribution centers and related assets in Saudi Arabia, an idle facility in North America, our plastics business subsidiary in South America, and two carrier vessels. 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.

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 of $39.5 million during 2024 primarily related to the sale of two idle facilities and a warehouse in Chile, a Canadian distribution center and certain assets of Fresh Leaf Farms, a North American subsidiary in our fresh and value-added products segment. The gain on disposal of property, plant and equipment, net and subsidiary of $37.9 million during 2023 primarily related to the sales of two distribution centers and related assets in Saudi Arabia, an idle facility in North America, our plastics business subsidiary in South America, and two carrier vessels.

Previous wording

Asset impairment and other charges (credits), net -Asset impairment and other charges (credits), net of $143.4 million in 2023 primarily consisted of (1) $109.6 million impairment charges related to customer list and trade name intangible assets and building, land, and land improvements assets in North America related to our fresh and value added segment (2) a $21.6 million impairment charge related to goodwill in our prepared foods reporting unit, (3) a $3.7 million impairment charge related to low-yielding banana farms in the Philippines, (4) $2.6 million impairment charge related to low-yielding deciduous farms in Chile, (5) $1.8 million impairment charges due to low productivity grape vines in South America, and (6) $1.3 million of expenses, net of insurance reimbursements, incurred in connection with a cybersecurity incident. 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.

Current wording

2023 primarily consisted of (1) $109.6 million impairment charges related to customer list and trade name intangible assets and building, land, and land improvements assets in North America related to our fresh and value-added products segment (2) a $21.6 million impairment charge related to goodwill in our prepared foods reporting unit, (3) a $3.7 million impairment charge related to low-yielding banana farms in the Philippines, (4) a $4.4 million impairment charge related to low-yielding deciduous farms in Chile, and (5) $1.3 million of expenses, net of insurance reimbursements, incurred in connection with a cybersecurity incident.

Previous wording

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.

Current wording

Interest expense -Interest expense decreased by $5.7 million in 2024 when compared with 2023, primarily due to lower average debt balances.

Previous wording

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.

Current wording

Other expense, net -Other expense, net, was $8.4 million in 2024 compared with $19.3 million in 2023. The decrease in expense of $10.9 million was mainly driven by equity earnings of unconsolidated companies within the food and nutrition sector.

Previous wording

Income tax provision - Income tax provision was $18.1 million in 2023 compared with $20.1 million in 2022. The decrease in the income tax provision of $2.0 million is primarily due to decreased earnings in certain higher tax jurisdictions offset by the tax effect related to the sale of our plastics business subsidiary in the second quarter of the year, and asset sales in Saudi Arabia and North America during the first quarter of the year.

Current wording

Income tax provision - Income tax provision was $29.1 million in 2024 compared with $18.1 million in 2023. The increase in the income tax provision of $11.0 million is primarily due to increased earnings in certain higher tax jurisdictions.

Previous wording

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. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 30, 2022, filed with the Securities and Exchange Commission on February 22, 2023, which is incorporated herein by reference.

Current wording

For a comparison of our results of operations for the year ended December 29, 2023, compared to the year ended December 30, 2022, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 29, 2023, filed with the SEC on February 26, 2024, which is incorporated herein by reference.

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 December 29, 2023, our principal sources of liquidity are (i) cash generated from operations of our subsidiaries, (ii) our combined $956 million of credit facilities with an available capacity of approximately $526 million and (iii) existing cash and cash equivalents of $33.8 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.

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 December 27, 2024, our principal sources of liquidity are (i) cash generated from operations of our subsidiaries, (ii) our combined $806 million of credit facilities with an available capacity of approximately $539 million and (iii) existing cash and cash equivalents of $32.6 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 $177.9 million for 2023 compared with $61.8 million for 2022, an increase of $116.1 million. 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. Partially offsetting the increase was lower levels of accounts payable and accrued expenses, mainly due to the timing of period end payments to suppliers.

Current wording

Net cash provided by operating activities was $182.5 million for 2024 compared with $177.9 million for 2023, an increase of $4.6 million. The increase in net cash provided by operating activities was principally attributable to current year working capital fluctuations, primarily a result of higher levels of accounts payable and accrued expenses compared to the prior year due to the timing of period end payments to suppliers.

Previous wording

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. 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. 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.

Current wording

Working capital was $599.8 million at December 27, 2024 compared with $603.7 million at December 29, 2023, a decrease of $3.9 million. The decrease in working capital was mainly due to lower levels of (i) other accounts receivable and (ii) raw materials and packaging supplies inventory. Partially offsetting this decrease in working capital was a (a) decrease in current maturities of operating leases, (b) an increase in trade accounts receivable and (c) growing crops inventory.

Previous wording

Net cash provided by (used in) investing activities was $56.4 million for 2023 compared with $(49.1) million for 2022. Net cash provided by investing activities for 2023 primarily consisted of proceeds from the sale of property, plant and equipment and subsidiary of $119.9 million, primarily relating to the sale of two distribution centers in Saudi Arabia, an idle production facility in North America, land assets in South and Central America, and proceeds from the sale of our plastics business subsidiary in South America for total purchase consideration of $16.5 million, of which we received $14.0 million. 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.

Current wording

Net cash provided by investing activities for 2023 primarily consisted of proceeds from the sale of property, plant and equipment and subsidiary of $119.9 million, primarily relating to the sale of two distribution centers in Saudi Arabia, an idle production facility in North America, land in South and Central America, and proceeds from the sale of our plastics business subsidiary in South America for total purchase consideration of $16.5 million, of which we received $14.0 million. The remaining $2.5 million, which includes $0.5 million of post-closing adjustments, will be received in three successive semi-annual installments. Two of these installments, amounting to $1.8 million, were received during 2024. 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.

Previous wording

Capital expenditures related to thefresh 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. 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.

Current wording

Capital expenditures related to thefresh and value-added products segment accounted for $35.5 million, or 69%, of our 2024 capital expenditures and $31.3 million, or 54%, of our 2023 capital expenditures. During 2024 capital expenditures primarily related to (1) improvements to our pineapple operations in Central America, Kenya and the Philippines and (2) improvements and enhancements to our production facilities in North America and Europe. During 2023, 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.

Previous wording

Capital expenditures related to thebanana 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.

Current wording

Capital expenditures related to thebanana segment accounted for $13.7 million, or 26%, of total 2024 capital expenditures and $12.8 million, or 22%, of total 2023 capital expenditures. During 2024, these capital expenditures primarily related to improvements to our production operations in Central America and port facilities in North America. During 2023, these capital expenditures primarily related to improvements to our production operations in Central America.

Previous wording

Capital expenditures related to theother 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.

Current wording

Capital expenditures related to theother products and services segment accounted for $2.5 million, or 5%, of our 2024 capital expenditures and $13.6 million, or 24%, of our 2023 capital expenditures. During 2024 these capital expenditures primarily related to our biomass initiatives. During 2023, these capital expenditures primarily related to improvements to our Jordanian poultry operations.

Previous wording

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. 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.

Current wording

Capital expenditures for 2025 are expected to be approximately $80 million to $90 million, primarily consisting of (1) upgrades to our pineapple production operations in Central America and the Philippines and (2) investments to improve and expand our fresh-cut and prepared foods operations in Africa. 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.

Previous wording

Net cash used in financing activities was $213.5 million for 2023 and $12.0 million for 2022. Net cash used in financing activities for 2023 primarily consisted of (i) net payments on long-term debt of $139.8 million, (ii) dividends paid of $35.9 million, (iii) distributions to noncontrolling interests of $17.9 million, including a distribution to our minority partner in Saudi Arabia in connection with the sale of the two distribution centers completed in the first quarter of 2023, (iv) repurchase and retirement of ordinary shares of $11.8 million and (v) a $5.2 million payment to acquire the remaining 25% interest in one of our Mann Packing subsidiaries, as the noncontrolling shareholder exercised its put option during the second quarter of 2023. 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.

Current wording

Net cash used in financing activities was $209.9 million for 2024 and $213.5 million for 2023. Net cash used in financing activities for 2024 primarily consisted of (i) net payments on long-term debt of $155.9 million, (ii) dividends paid of $47.8 million, and (iii) payment of deferred financing costs of $2.2 million in conjunction with the February amendment of our Second Amended and Restated Credit Agreement. Net cash used in financing activities for 2023 primarily consisted of (i) net payments on long-term debt of $139.8 million, (ii) dividends paid of $35.9 million, (iii) distributions to noncontrolling interests of $17.9 million, including a distribution to our minority partner in Saudi Arabia in connection with the sale of the two distribution centers completed in the first quarter of 2023, (iv) repurchase and retirement of ordinary shares of $11.8 million and (v) a $5.2 million payment to acquire the remaining 25% interest in one of our Mann Packing subsidiaries, as the noncontrolling shareholder exercised its put option during the second quarter of 2023.

Previous wording

On October 1, 2019, we and certain of our subsidiaries entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) with the financial institutions and other lenders named therein, including Bank of America, N.A. as administrative agent and BofA Securities, Inc. as sole lead arranger and sole bookrunner. 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. 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

Current wording

On October 1, 2019, we and certain of our subsidiaries entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) with the financial institutions and other lenders named therein, including Bank of America, N.A. as administrative agent and BofA Securities, Inc. as sole lead arranger and sole bookrunner. The Second A&R Credit Agreement provided for a five-year, $0.9 billion syndicated senior unsecured revolving credit facility maturing on October 1, 2024. The Second A&R Credit Agreement was subsequently amended on December 30, 2022, to replace the Eurocurrency Rate with the Term Secured Overnight Financing Rate ("Term SOFR") effective January 3, 2023.

Previous wording

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 2024 Amended Credit Facility provides for a five-year, $750 million syndicated senior unsecured revolving credit facility ("Amended Revolving Credit Facility") and extends the existing maturity date to February 21, 2029. The 2024 Amended Credit Facility permits, under certain conditions, the ability to add an option for $200 million of receivables financing. Amounts outstanding under the Amended Revolving Credit Facility accrue interest at a rate equal to based on the Term SOFR rate (as defined in the 2024 Amended Credit Facility) plus a margin ranging from 1.0% to 1.6%.

Current wording

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 2024 Amended Credit Facility provides for a five-year, $0.75 billion syndicated senior unsecured revolving credit facility ("Amended Revolving Credit Facility") and extends the existing maturity date to February 21, 2029. Amounts borrowed under the revolving credit facility accrue interest at a rate equal to the Term SOFR rate plus a margin that ranges from 1.0% to 1.625% based on our Consolidated Leverage Ratio (as defined in the 2024 Amended Credit Facility). In addition, we pay a fee on unused commitments at a rate equal to 0.150% to 0.250% based on our Consolidated Leverage Ratio. The 2024 Amended Credit Facility also permits, under certain conditions, $200 million of Permitted Receivables Financing (as defined in the 2024 Amended Credit Facility). We intend to use funds borrowed under the Amended Revolving Credit Facility from time to time for general corporate purposes, working capital, capital expenditures and other permitted investment opportunities.

Previous wording

The Second A&R Credit Agreement provides for an accordion feature that permits us, without the consent of the other lenders, to request that one or more lenders provide us with increases in revolving credit facility or term loans up to an aggregate of $300 million (“Incremental Increases”). The aggregate amount of Incremental Increases can be further increased to the extent that after giving effect to the proposed increase in revolving credit facility commitments or term loans, our Consolidated Leverage Ratio, on a pro forma basis, would not exceed 2.50 to 1.00. Our ability to request such increases in the Revolving Credit Facility or term loans is subject to its compliance with customary conditions set forth in the Second A&R Credit Agreement including compliance, on a pro forma basis, with the financial covenants and ratios set forth therein. Upon our request, each lender may decide, in its sole discretion, whether to increase all or a portion of its revolving credit facility commitment or provide term loans.

Current wording

The 2024 Amended Credit Facility provides for an accordion feature that permits us, without the consent of the other lenders, to request that one or more lenders provide us with increases in revolving credit facility or term loans up to an aggregate of $300 million (“Incremental Increases”). The aggregate amount of Incremental Increases can be further increased to the extent that after giving effect to the proposed increase in revolving credit facility commitments or term loans our Consolidated Leverage Ratio, on a pro forma basis, would not exceed 2.75 to 1.00. Our ability to request such increases or term loans is subject to our compliance with customary conditions set forth in the 2024 Amended Credit Facility including compliance, on a pro forma basis, with certain financial covenants and ratios. Upon our request, each lender may decide, in its sole discretion, whether to increase all or a portion of its revolving credit facility commitment or provide term loans.

Previous wording

The Second A&R Credit Agreement requires us to comply with certain financial and other covenants. Specifically, it requires us to maintain a 1) Consolidated Leverage Ratio of not more than 3.50 to 1.00 at any time during any period of four consecutive fiscal quarters, subject to certain exceptions and 2) a minimum Consolidated Interest Coverage Ratio of not less than 2.25 to 1.00 as of the end of any fiscal quarter. Additionally, it requires us to comply with certain other covenants, including limitations on capital expenditures, stock repurchases, the amount of dividends that can be paid in the future, the amount and types of liens and indebtedness, material asset sales, and mergers. Under the Second A&R Credit Agreement, we are permitted to declare or pay cash dividends in any fiscal year up to an amount that does not exceed the greater of (i) an amount equal to the greater of (A) 50% of the Consolidated Net Income (as defined in the Second A&R Credit Agreement) for the immediately preceding fiscal year or (B) $25 million or (ii) the greatest amount which would not cause the Consolidated Leverage Ratio (determined on a pro forma basis) to exceed 3.25 to 1.00. It also provides an allowance for stock repurchases to be an amount not exceeding the greater of (i) $150 million in the aggregate or (ii) the amount that, after giving pro forma effect thereto and any related borrowings, will not cause the Consolidated Leverage Ratio to exceed 3.25 to 1.00. 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.

Current wording

The 2024 Amended Credit Facility contains similar financial covenants to those included within the Second A&R Credit Agreement. Specifically, it requires us to maintain 1) a Consolidated Leverage Ratio of not more than 3.75 to 1.00 at any time during any period of four consecutive fiscal quarters, subject to certain exceptions and 2) minimum Consolidated Interest Coverage Ratio of not less than 2.25 to 1.00 as of the end of any fiscal quarter. Additionally, it requires us to comply with certain other covenants, including limitations on capital investments, the amount of dividends that can be paid in the future, the amounts and types of liens and indebtedness, material asset sales, and mergers. Under the 2024 Amended Credit Facility, we are permitted to declare or pay cash dividends in any fiscal year up to an amount that does not exceed the greater of (i) an amount equal to (1) the greater of (A) 50% of the Consolidated Net Income (as defined in the 2024 Amended Credit Facility) for the immediately preceding fiscal year or (B) $25 million (the "Base Dividend Basket") plus (2) commencing in the fiscal year ending December 26, 2025 any portion of the Base Dividend Basket not used in the immediately preceding fiscal year, or (ii) the greatest amount which would not cause the Consolidated Leverage Ratio (determined on a pro forma basis as of the date of declaration or payment) to exceed 3.50 to 1.00. It also provides an allowance for stock repurchases to be an amount not exceeding the greater of (i) (A) $50,000,000 (the "Base Redemption Basket") plus (B) commencing in the fiscal year ending December 26, 2025, any portion of the Base Redemption Basket not used in the immediately preceding fiscal year or (ii) the greatest amount which would not cause the Consolidated Leverage Ratio (determined on a pro forma basis as of the date of such repurchase) to exceed 3.50 to 1.00. As of December 27, 2024, we were in compliance with all the covenants contained in the 2024 Amended Credit Facility.

Previous wording

As of December 29, 2023, we had $525.5 million of borrowing availability under committed working capital facilities, primarily under the Revolving Credit Facility. As a result of the 2024 Amended Credit Facility, availability under committed working capital facilities was reduced by approximately $150 million due to the reduction in the size of our revolving credit facility during February 2024.

Current wording

As of December 27, 2024, we had $539.2 million of borrowing availability under committed working capital facilities, primarily under the Amended Revolving Credit Facility.

Previous wording

We believe that our cash on hand, borrowing 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. However, we cannot predict whether future developments associated with the current economic environment will materially adversely affect our long-term liquidity position. 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 on Form 10-K.

Current wording

We believe that our cash on hand, borrowing capacity available under our Amended 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. However, we cannot predict whether future developments associated with the current economic environment will materially adversely affect our long-term liquidity position. Our liquidity assumptions, the adequacy of our available funding sources, and our ability to meet our Amended 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.

Previous wording

We are exposed to fluctuations in currency exchange rates against the U.S. dollar on our results of operations and financial condition 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 mature within one year. 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.

Current wording

We are exposed to fluctuations in currency exchange rates against the U.S. dollar on our results of operations and financial condition 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 mature within one year. The fair value of our derivatives related to our foreign currency cash flow hedges was a net asset position of $0.3 million as of December 27, 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 the contracted rates.

Previous wording

We are exposed to fluctuations in variable interest rates on our results of operations and financial condition, 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 LIBOR-based borrowings through 2028. 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. 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

We are exposed to fluctuations in variable interest rates on our results of operations and financial condition, 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. On July 19, 2024, we agreed to terminate our outstanding interest rate swap agreement in exchange for $7.3 million, net of fees of $0.2 million. 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. Based on our assessment that the originally hedged cash flows associated with our variable rate borrowings remain probable, the proceeds received as a result of the termination of our outstanding interest rate swap agreement will remain in accumulated other comprehensive loss and be reclassified to earnings through interest expense over the remaining life of the hedged debt. At December 27, 2024, $5.5 million remained in accumulated other comprehensive loss related to the terminated interest rate swap, of which $2.7 million is expected to be reclassified to earnings through interest expense over the next twelve months.

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 $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.

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 $0.3 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 along with the earnings effect of the related forecasted transactions.

Previous wording

(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%.

Current wording

(1) We utilize a variable interest rate on our long-term debt, and for presentation purposes we have used an assumed average rate of 4.3%.

Previous wording

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.

Current wording

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 Chile that meet our quality standards. Total purchases under these agreements amounted to $643.4 million for 2024, $631.6 million for 2023, and $625.9 million for 2022.

Previous wording

For a comparison of our liquidity and capital resources for the year ended December 30, 2022, compared to the year ended December 31, 2021, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 30, 2022, filed with the Securities and Exchange Commission on February 22, 2023, which is incorporated herein by reference.

Current wording

For a comparison of our liquidity and capital resources for the year ended December 29, 2023, compared to the year ended December 30, 2022, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 29, 2023, filed with the SEC on February 26, 2024, which is incorporated herein by reference.