Fresh Del Monte Produce Inc. Reports Operating Results (10-Q)
Fresh Del Monte Produce Inc. has a market cap of $1.31 billion; its shares were traded at around $21.07 with a P/E ratio of 7.8 and P/S ratio of 0.4. FDP is in the portfolios of Steven Cohen of SAC Capital Advisors, Charles Brandes of Brandes Investment, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:Net cash used in investing activities for the first six months of 2010 was $18.7 million compared with $36.8 million for the first six months of 2009. Net cash used in investing activities for the first six months of 2010 consisted of capital expenditures of $28.8 million, partially offset by proceeds from sales of property, plant and equipment of $5.9 million and the return of capital by one of our Costa Rica subsidiaries of $4.2 million. Capital expenditures for the first six months of 2010 were primarily for expansion of production facilities in Costa Rica, Guatemala, Brazil, Philippines and Kenya and port facilities in North America related to the banana, other fresh produce and prepared food segments. Proceeds from sales of property, plant and equipment for the first six months of 2010 consisted primarily of the sale of three refrigerated vessels.
Net cash used in financing activities for the first six months of 2010 was $155.0 million compared with $177.5 million for the first six months of 2009. Net cash used in financing activities for the first six months of 2010 consisted of net repayments on long-term debt of $107.0 million and repurchases of our ordinary shares of $49.7 million, partially offset by contributions from noncontrolling interests of $1.5 million and proceeds from stock options exercised of $0.2 million. Net cash used in financing activities for the first six months of 2009 consisted of net repayments on long-term debt of $186.0 million, partially offset by contributions from noncontrolling interests of $8.5 million.
At July 2, 2010, we had $292.5 million available under committed working capital facilities, primarily under the Credit Facility. At July 2, 2010, we applied $18.7 million to the letter of credit facility, comprised primarily of certain contingent obligations and other governmental agencies and purchases of equipment guarantees. We also had $9.9 million in other letters of credit and bank guarantees not included in the letter of credit facility.
As of July 2, 2010, we had $216.0 million of long-term debt and capital lease obligations, including the current portion, consisting of $203.2 million outstanding under the Credit Facility, $4.7 million of capital lease obligations and $8.1 million of other long-term debt.
The fair value of our derivatives changed from a net asset of $19.6 million as of January 1, 2010, to a net asset of $22.4 million as of July 2, 2010 related to our foreign currency cash flow hedges and bunker fuel hedges primarily as a result of the strengthening of the U.S. dollar relative to the euro and British pound, partially offset by the strengthening of the Japanese yen relative to the U.S. dollar and decreasing oil prices. We expect that $21.2 million in net assets outstanding will be transferred to earnings during the next 12 months and $1.2 million in 2011 and 2012, along with the earnings effect of the related forecasted transaction for each year.
Cost of Products Sold. Cost of products sold was $917.0 million for the second quarter of 2010 compared with $887.4 million for the second quarter of 2009, an increase of $29.6 million. This increase in cost of products sold was primarily attributable to higher sales volumes of bananas and pineapples, partially offset by lower inventory write-offs. During the second quarter of 2010, cost of products sold included $2.9 million of inventory write-offs and clean-up costs associated with flood damage to our Guatemala banana plantation and $5.6 million related to the write-off of growing crop inventory principally related to the discontinuation of our Brazil melon growing operations. During the second quarter of 2009, cost of products sold included a charge of $17.1 million related to the write-off of growing crop inventory as a result of our decision to discontinue pineapple planting in Brazil.
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