Edgar Filing: FRESH DEL MONTE PRODUCE INC

a50034249.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended September 30, 2011

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

1-14706

(Commission file number)

FRESH DEL MONTE PRODUCE INC.

(Exact Name of Registrant as Specified in Its Charter)

The Cayman Islands	N/A
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S Employer Identification No.)

c/o Walkers SPV Limited Walker House, 87 Mary Street George Town, Grand Cayman, KY1-9002 Cayman Islands	N/A
(Address of Registrant’s Principal Executive Office)	(Zip Code)

(305) 520-8400

(Registrant’s telephone number including area code)

Please send copies of notices and communications from the Securities and Exchange Commission to:

c/o Del Monte Fresh Produce Company

241 Sevilla Avenue

Coral Gables, Florida 33134

(Address of Registrant’s U.S. Executive Office)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer x	Accelerated filer ¨
	Non-accelerated filer ¨	Smaller reporting company ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of October 21, 2011, there were 57,755,757 ordinary shares of Fresh Del Monte Produce Inc. issued and outstanding, respectively.

Forward-Looking Statements

This report, information included in future filings by us and information contained in written material, press releases and oral statements, issued by or on behalf of us contains, or may contain, statements that constitute forward-looking statements. In this report, these statements appear in a number of places and include statements regarding the intent, beliefs or current expectations of us or our officers (including statements preceded by, followed by or that include the words “believes”, “expects”, “anticipates” or similar expressions) with respect to various matters, including our plans and future performance. These forward-looking statements involve risks and uncertainties. Fresh Del Monte’s actual plans and performance may differ materially from those in the forward-looking statements as a result of various factors, including (i) the uncertain global economic environment and the timing and strength of a recovery in the markets we serve, and the extent to which adverse economic conditions continue to affect our sales volume and results, including our ability to command premium prices for certain of our principal products, or increase competitive pressures within the industry, (ii) the impact of governmental initiatives in the United States and abroad to spur economic activity, including the effects of significant government monetary or other market interventions on inflation, price controls and foreign exchange rates, (iii) the impact of governmental trade restrictions, including adverse governmental regulation that may impact our ability to access certain markets, (iv) our anticipated cash needs in light of our liquidity, (v) the continued ability of our distributors and suppliers to have access to sufficient liquidity to fund their operations, (vi) trends and other factors affecting our financial condition or results of operations from period to period, including changes in product mix or consumer demand for branded products such as ours, particularly as consumers remain price-conscious in the current economic environment; anticipated price and expense levels; the impact of crop disease, severe weather conditions, such as flooding, or natural disasters, such as earthquakes, on crop quality and yields and on our ability to grow, procure or export our products; the impact of prices for petroleum-based products and packaging materials; and the availability of sufficient labor during peak growing and harvesting seasons, (vii) the impact of pricing and other actions by our competitors, particularly during periods of low consumer confidence and spending levels, (viii) the impact of foreign currency fluctuations, (ix) our plans for expansion of our business (including through acquisitions) and cost savings, (x) our ability to successfully integrate acquisitions into our operations, (xi) the impact of impairment or other charges associated with exit activities, crop or facility damage or otherwise, (xii) the timing and cost of resolution of pending legal and environmental proceedings, (xiii) the impact of changes in tax accounting or tax laws (or interpretations thereof), and the impact of settlements of adjustments proposed by the Internal Revenue Service or other taxing authorities in connection with our tax audits, and (xiv) the cost and other implications of changes in regulations applicable to our business, including potential legislative or regulatory initiatives in the United States or elsewhere directed at mitigating the effects of climate change. All forward-looking statements in this report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our plans and performance may also be affected by the factors described in Item 1A-“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010 along with other reports that we have on file with the Securities and Exchange Commission.

TABLE OF CONTENTS

		Page
PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

	Consolidated Balance Sheets (unaudited) as of September 30, 2011 and December 31, 2010	1

	Consolidated Statements of Income (unaudited) for the quarter and nine months ended September 30, 2011 and October 1, 2010	2

	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2011 and October 1, 2010	3

	Notes to Consolidated Financial Statements (unaudited)	4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

Item 3. Quantitative and Qualitative Disclosures About Market Risk		30

Item 4. Controls and Procedures		30

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		31

Item 1A. Risk Factors		31

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31

Item 6. Exhibits		32

Signatures		33

PART I: FINANCIAL INFORMATION

Item 1.

Financial Statements

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(U.S. dollars in millions, except share and per share data)

	September 30,			December 31,
	2011			2010
Assets
Current assets:
Cash and cash equivalents	$	26.8		$	49.1
Trade accounts receivable, net of allowance of
$6.5 and $7.8, respectively		271.1			313.8
Other accounts receivable, net of allowance
of $8.0 and $12.3, respectively		55.6			63.4
Inventories		401.7			410.4
Deferred income taxes		14.8			17.5
Prepaid expenses and other current assets		41.7			27.1
Total current assets		811.7			881.3

Investments in and advances to unconsolidated companies		3.0			4.0
Property, plant and equipment, net		1,033.1			1,033.1
Deferred income taxes		58.7			57.2
Other noncurrent assets		130.1			135.7
Goodwill		402.6			406.4
Total assets	$	2,439.2		$	2,517.7

Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued expenses	$	340.9		$	331.9
Current portion of long-term debt and capital lease obligations		5.1			5.3
Deferred income taxes		25.3			27.5
Income taxes and other taxes payable		19.6			2.8
Total current liabilities		390.9			367.5

Long-term debt and capital lease obligations		108.3			290.3
Retirement benefits		75.5			76.5
Other noncurrent liabilities		58.9			69.6
Deferred income taxes		80.6			82.3
Total liabilities		714.2			886.2

Commitments and contingencies

Shareholders' equity:
Preferred shares, $0.01 par value; 50,000,000 shares
authorized; none issued or outstanding		-			-
Ordinary shares, $0.01 par value; 200,000,000 shares
authorized; 58,237,239 issued and 58,036,839 outstanding
and 58,725,430 issued and outstanding, respectively		0.6			0.6
Paid-in capital		454.2			462.9
Retained earnings		1,258.5			1,167.8
Less: 200,400 treasury shares at cost		(4.7	)		-
Accumulated other comprehensive loss		(10.2	)		(24.1	)
Total Fresh Del Monte Produce Inc. shareholders' equity		1,698.4			1,607.2
Noncontrolling interests		26.6			24.3
Total shareholders' equity		1,725.0			1,631.5
Total liabilities and shareholders' equity	$	2,439.2		$	2,517.7

See accompanying notes.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(U.S. dollars in millions, except share and per share data)


	Quarter ended					Nine months ended
	September 30,		October 1,			September 30,		October 1,
	2011		2010			2011		2010

Net sales	$	795.2	$	793.1		$	2,808.9	$	2,736.2
Cost of products sold		732.3		741.1			2,520.3		2,503.4
Gross profit		62.9		52.0			288.6		232.8

Selling, general and administrative expenses		47.1		40.9			141.6		125.9
Gain on sales of property, plant and equipment		1.8		4.5			2.6		7.9
Asset impairment and other charges, net		0.6		0.1			12.8		24.1
Operating income		17.0		15.5			136.8		90.7

Interest expense		2.1		2.2			5.8		8.6
Interest income		0.4		0.3			0.8		0.7
Other expense (income), net		0.4		(3.0	)		3.8		6.6

Income before income taxes		14.9		16.6			128.0		76.2

Provision for income taxes		2.0		3.2			22.3		4.7
Net income	$	12.9	$	13.4		$	105.7	$	71.5

Less: net income (loss) attributable to noncontrolling interests		0.7		(1.1	)		3.1		(0.3	)
Net income attributable to Fresh Del Monte Produce Inc.	$	12.2	$	14.5		$	102.6	$	71.8


Net income per ordinary share attributable to Fresh Del Monte Produce Inc. - Basic	$	0.21	$	0.24		$	1.73	$	1.16

Net income per ordinary share attributable to Fresh Del Monte Produce Inc. - Diluted	$	0.21	$	0.24		$	1.72	$	1.16

Dividends declared per ordinary share	$	0.10	$	-		$	0.20	$	-

Weighted average number of ordinary shares:
Basic		59,393,954		60,735,357			59,266,561		61,984,107
Diluted		59,510,829		60,919,626			59,556,442		62,149,688

See accompanying notes.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(U.S. dollars in millions)


	Nine months ended
	September 30,			October 1,
	2011			2010
Operating activities:
Net income	$	105.7		$	71.5
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		55.1			59.2
Amortization of debt issuance costs		3.0			1.7
Stock-based compensation expense		7.4			6.1
Asset impairment charges		9.3			25.8
Change in uncertain tax positions		4.2			(0.9	)
Gain on sales of property, plant and equipment		(2.5	)		(7.9	)
Equity in loss of unconsolidated companies		0.6			0.7
Deferred income taxes		(1.8	)		(6.2	)
Foreign currency translation adjustment		(0.8	)		(3.6	)
Changes in operating assets and liabilities:
Receivables		47.7			46.7
Inventories		6.7			42.8
Prepaid expenses and other current assets		(2.4	)		(5.5	)
Accounts payable and accrued expenses		16.6			18.9
Other noncurrent assets and liabilities		-			(9.5	)
Net cash provided by operating activities		248.8			239.8

Investing activities:
Capital expenditures		(62.7	)		(48.0	)
Proceeds from sales of property, plant and equipment		3.9			12.5
Return of investment by an unconsolidated company		-			4.2
Net cash used in investing activities		(58.8	)		(31.3	)

Financing activities:
Proceeds from long-term debt		362.2			389.3
Payments on long-term debt		(545.6	)		(512.8	)
Contributions from (distributions to) noncontrolling interests, net		(3.1	)		3.4
Proceeds from stock options exercised		21.8			0.8
Dividends paid		(11.9	)		-
Repurchase of shares		(37.9	)		(78.8	)
Net cash used in financing activities		(214.5	)		(198.1	)

Effect of exchange rate changes on cash		2.2			5.9

Net (decrease) increase in cash and cash equivalents		(22.3	)		16.3
Cash and cash equivalents, beginning		49.1			34.5
Cash and cash equivalents, ending	$	26.8		$	50.8

Supplemental cash flow information:
Cash paid for interest	$	2.9		$	6.5
Cash paid for income taxes	$	2.9		$	4.3

Non-cash financing and investing activities:
Purchase of assets under capital lease obligations	$	0.3		$	0.5
Retirement of treasury shares	$	37.9		$	76.9
Purchase of unconsolidated subsidiary	$	0.5		$	-
Sale of unconsolidated subsidiary	$	0.8		$	-

See accompanying notes.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. General

Reference in this report to Fresh Del Monte, “we”, “our”, “us” and the “Company” refer to Fresh Del Monte Produce Inc. and its subsidiaries, unless the context indicates otherwise.

We were incorporated under the laws of the Cayman Islands in 1996 and are engaged primarily in the worldwide production, transportation and marketing of fresh produce. We source our products, which include bananas, pineapples, melons and non-tropical fruit (including grapes, apples, pears, peaches, plums, nectarines, avocados, citrus and kiwis) and tomatoes, primarily from Central America, South America, Africa and the Philippines. We also source products from North America and Europe and distribute our products in North America, Europe, Asia, South America, Africa and the Middle East. Products are sourced from our Company-owned farms, through joint venture arrangements and through supply contracts with independent growers. We have the exclusive right to use the DEL MONTE® brand for fresh fruit, fresh vegetables and other fresh and fresh-cut produce and certain other specified products on a royalty-free basis under a worldwide, perpetual license from Del Monte Corporation, an unaffiliated company that owns the DEL MONTE® trademark. Del Monte Corporation and several other unaffiliated companies manufacture, distribute and sell under the DEL MONTE® brand canned or processed fruit, vegetables and other produce, as well as dried fruit, snacks and other products in certain geographic regions.

We are also a producer, marketer and distributor of prepared fruit and vegetables, juices and snacks and we hold a perpetual, royalty-free license to use the DEL MONTE® brand for prepared foods throughout Europe, Africa, the Middle East and countries formerly part of the Soviet Union.

The accompanying unaudited Consolidated Financial Statements for the quarter and nine months ended September 30, 2011 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature considered necessary for fair presentation have been included. Operating results for the quarter and nine months ended September 30, 2011, are subject to significant seasonal variations and are not necessarily indicative of the results that may be expected for the year ending December 30, 2011. For further information, refer to the Consolidated Financial Statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended December 31, 2010.

Certain amounts from 2010 have been reclassified to conform to the 2011 presentation. As a result of our decision to exit grain operations during 2010 and the elimination of third-party ocean freight services from Northern Europe to the Caribbean during 2009, we have combined the other products and services segment with the other fresh produce segment in 2011 due to the relative size of the remaining operations.

We are required to evaluate events occurring after September 30, 2011 for recognition and disclosure in the Consolidated Financial Statements for the quarter and nine months ended September 30, 2011. Events are evaluated based on whether they represent information existing as of September 30, 2011, which require recognition in the Consolidated Financial Statements, or new events occurring after September 30, 2011, which do not require recognition but require disclosure if the event is significant to the Consolidated Financial Statements. We evaluated events occurring subsequent to September 30, 2011 through the date of issuance of these Consolidated Financial Statements.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

2. Recently Issued Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) to amend the guidance in the Accounting Standards Codification (“ASC”) related to Intangibles – Goodwill and Other. This amendment will provide us the option of performing a qualitative assessment before calculating the fair value of the reporting unit. If it is determined that the fair value of the reporting unit is more likely than not less than the carrying amount, on the basis of qualitative factors, the two-step impairment test would be required. The amendments is effective for annual and interim goodwill impairment tests performed for our 2012 fiscal year, with earlier adoption permitted. This ASU impacts the manner in which goodwill is assessed for impairment but does not change how goodwill is calculated or assigned to reporting units, nor does it revise the requirement to test goodwill annually for impairment. It also does not change the requirement to test goodwill for impairment between annual tests if there are indicators of impairment. This ASU has no effect on our financial condition, results of operations or cash flows.

In June 2011, the FASB issued an ASU to amend guidance in the ASC related to the Presentation of Comprehensive Income. This amendment will require us to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements. It eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. The amended guidance, which must be applied retroactively, is effective for interim and annual periods beginning the first day of our 2012 fiscal year, with earlier adoption permitted. This ASU impacts presentation only, and it will have no effect on our financial condition, results of operations or cash flows.

In May 2011, the FASB issued an ASU to amend the guidance in the ASC on Fair Value Measurements and Disclosures. This amendment is intended to result in convergence between U.S. GAAP and International Financial Reporting Standards (“IFRS”) requirements for measurement of and disclosures about fair value. This guidance clarifies the application of existing fair value measurements and disclosures, and changes certain principles or requirements for fair value measurements and disclosures. The amendment is effective for interim and annual periods beginning the first day of our 2012 fiscal year. We are currently evaluating the impact, if any, of adopting this ASU to our financial condition, results of operations or cash flows.

3. Asset Impairment and Other Charges

The following represents a summary of asset impairment and other charges, net recorded during the quarter and nine months ended September 30, 2011 and October 1, 2010 (U.S. dollars in millions):

	Quarter ended								Nine-months ended
	September 30, 2011								September 30, 2011
	Long-lived and other asset impairment		Exit activity and other charges			Total			Long-lived and other asset impairment			Exit activity and other charges		Total
Banana segment:
Philippine decision to abandon an isolated
area of our banana operation	$	-	$	-		$	-		$	-		$	1.3	$	1.3
Costa Rica exit of low banana-producing areas		-		-			-			0.8			-		0.8
United Kingdom closure of distribution center		0.6		0.7			1.3			0.6			0.7		1.3
Other fresh produce segment:
Central America melon program rationalization		-		-			-			7.7	(1)		0.5		8.2
Hawaiian other charges and legal costs (reversal)
related to pineapple operation exit activities		-		(0.7	)		(0.7	)		-			1.0		1.0
Prepared segment:
Other impairment charges		-		-			-			0.2			-		0.2
Total asset impairment and other charges, net	$	0.6	$	-		$	0.6		$	9.3		$	3.5	$	12.8

(1) Includes melon goodwill impairment of $3.3 million

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

3. Asset Impairment and Other Charges (continued)

	Quarter ended								Nine months ended
	October 1, 2010								October 1, 2010
	Long-lived and other asset impairment		Exit activity and other charges			Total			Long-lived and other asset impairment		Exit activity and other charges			Total
Banana segment:
Guatemala banana plantation flood damage
and insurance reimbursements	$	0.2	$	(2.4	)	$	(2.2	)	$	6.0	$	(2.4	)	$	3.6
Brazil insurance recoveries for 2008 flooding
of banana plantations		-		-			-			-		(0.4	)		(0.4	)
North America relocation of port facility		0.7		-			0.7			0.7		-			0.7
Other fresh produce segment:
Brazil melon operation exit activities		-		-			-			-		1.1			1.1
Chile earthquake		-		-			-			1.0		-			1.0
Prepared segment:
United Kingdom Del Monte® perpetual,
royalty-free brand name license		1.4		-			1.4			1.4		-			1.4
South Africa exit activities		-		0.2			0.2			16.7		-			16.7
Total asset impairment and other charges, net	$	2.3	$	(2.2	)	$	0.1		$	25.8	$	(1.7	)	$	24.1

Exit Activity and Other Reserves

The following represents a rollforward of 2011 exit activity and other reserves (U.S. dollars in millions):

	Exit activity and other reserve balance at December 31, 2010		Impact to Earnings		Cash Paid			Exit activity and other reserve balance at September 30, 2011

Termination benefits	$	1.3	$	0.3	$	(0.6	)	$	1.0
Contract termination and other
exit activity charges		1.5		2.2		(1.6	)		2.1
	$	2.8	$	2.5	$	(2.2	)	$	3.1

Included in the exit activity and other reserve balance at September 30, 2011 are $2.1 million in contract termination costs related to the closure of under-utilized distribution centers in the United Kingdom in the banana segment and $1.0 million in termination benefits primarily related to the previously announced decision to exit Hawaiian production operations in the other fresh produce segment. We do not expect additional charges related to the exit and other activities mentioned above that would significantly impact our results of operations and financial condition.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

4. Noncontrolling Interests

The following table reconciles shareholders’ equity attributable to noncontrolling interests (U.S. dollars in millions):

	Nine months ended
	September 30,			October 1,
	2011			2010

Noncontrolling interests, beginning	$	24.3		$	22.1
Net income (loss) attributable to the noncontrolling interests		3.1			(0.3	)
Translation adjustments		0.1			0.8
Capital (distributions) contributions		(0.9	)		2.7
Noncontrolling interests, ending	$	26.6		$	25.3

5. Variable Interest Entities

Effective January 2, 2010, we adopted the ASU issued by the FASB on December 23, 2009, which codifies Statement of Financial Accounting Standard No. 167, “Amendments to FASB Interpretation No. 46(R)” and amends the consolidation guidance that applies to Variable Interest Entities (“VIEs”). The ASU amends many important provisions of the existing ASC guidance on “Consolidation”. This amended consolidation guidance for VIEs replaces the existing quantitative approach for identifying which enterprise should consolidate a VIE, which was based on which enterprise is exposed to a majority of the risks and rewards, with a qualitative approach, based on which enterprise has both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. Determinations about whether an enterprise should consolidate a VIE are required to be evaluated continuously as changes to existing relationships or future transactions may result in a consolidation or deconsolidation of VIEs. The adoption of the ASU did not have an impact on our Consolidated Financial Statements other than to require additional disclosures.

One of our Del Monte Gold® Extra Sweet pineapple producers meets the definition of a VIE pursuant to the ASC guidance on “Consolidation” and is consolidated. Our variable interest in this entity includes an equity investment and certain debt guarantees. All of this entity’s pineapple production is sold to us. Based on the criteria of this ASC, as amended by this ASU, we are the primary beneficiary of this entity’s expected residual returns or losses in excess of our ownership interest. Although we are the primary beneficiary, the VIE’s creditors do not have recourse against our general credit. At September 30, 2011, the VIE had total assets of $42.1 million and total liabilities of $9.9 million. The VIE had long-term debt of $4.8 million, which is collateralized by its property, plant and equipment and further guaranteed by a $1.0 million standby letter of credit issued by us. As of September 30, 2011, the VIE is current on the guaranteed long-term debt. There are no other restrictions on the assets of the VIE.

We have provided funding for capital investments in the VIE in proportion to our voting interest. We may from time to time in the future provide additional funding for capital investments in the VIE.

6. Financing Receivables

In July 2010, the FASB issued an ASU relating to improving disclosure on the credit quality of financing receivables and allowances for credit losses and requires expanded disclosures on the balance of financing receivables, aging of those receivables and related allowance for doubtful accounts information at a disaggregated level. The ASU also requires roll-forward of the allowance for doubtful accounts related to financing receivables. Financing receivables are defined as a contractual right to receive money, on demand or on fixed or determinable dates and is recognized as an asset in the creditor’s balance sheet. We adopted the guidance in this ASU on December 31, 2010 and additional guidance regarding disclosure of reporting period activity such as roll-forwards of the related allowance for doubtful accounts in our financial statements for the quarter ended September 30, 2011. This ASU did not have an impact to our Consolidated Financial Statements other than require us to provide increased disclosures.

Other accounts receivable less allowances are recognized on our accompanying Consolidated Balance Sheets at net realizable value, which approximates fair value. Other accounts receivable includes value-added taxes receivables, seasonal advances to growers and suppliers, which are usually short-term in nature, and other financing receivables.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

6. Financing Receivables (continued)

We source our products from various independent growers primarily in Central and South America, Africa and the Philippines. We also source products from North America and Europe. A significant portion of the fresh produce we sell is acquired through supply contracts with independent growers. In order to ensure the consistent high quality of our products and packaging, we make advances to independent growers and suppliers. These growers and suppliers typically sell all of their production to us and make payments on their advances as a deduction to the agreed upon selling price of the fruit or packaging material. The majority of the advances to growers and suppliers are for terms less than one year and typically span a growing season. In certain cases, there may be longer term advances with terms of up to 10 years. These advances are collateralized by property liens and pledges of the season’s produce; however certain factors such as the impact of weather (i.e. flooding) and crop disease may impact the ability for these growers to repay their advance.

Allowances against advances to growers and suppliers are established based on the company’s knowledge of the financial condition of the paying party and historical loss experience. Allowances are recorded and charged to expense when an account is deemed to be uncollectible. Occasionally, we agree to a payment plan or take steps to recover the advance via established collateral. Reserves for uncollectible advances are determined on a case by case basis depending on the production for the season and other contributing factors. Recoveries of advances to growers and suppliers previously reserved in the allowance are credited to operating income.

We also from time to time enter into notes receivable primarily related to asset sales. The majority of our notes receivable have terms that are less than one year.

The following table details financing receivables including the related allowance for doubtful accounts (U.S. dollars in millions):

	September 30,					December 31,
	2011					2010
	Short-term			Long-term		Short-term				Long-term
Gross advances to growers	$	29.0		$	2.3	$	34.2			$	0.5
Allowance for advances to growers		(3.4	)		-		(3.8	)			(0.2	)
Net advances to growers	$	25.6		$	2.3	$	30.4			$	0.3

Gross notes receivable	$	1.0		$	0.3	$	8.2			$	1.0
Allowance for notes receivable		-			-		(0.6	)			-
Net notes receivable	$	1.0		$	0.3	$	7.6		(a)	$	1.0

(a) Includes $6.9 million of notes receivable, net of allowance of $0.6 million, related to the sale of the assets of our South Africa canning operation, which was paid in January 2011.

The current and noncurrent portions of the financing receivables included above are classified in the Consolidated Balance Sheets in other accounts receivable and other noncurrent assets, respectively.

The following table details the credit risk profile of the above listed financing receivables (U.S. dollars in millions):

	Current Status		Past Due Status		Total
Gross advances to growers:
September 30, 2011	$	27.9	$	3.4	$	31.3
December 31, 2010		30.7		4.0		34.7
Gross notes receivable:
September 30, 2011	$	1.3	$	-	$	1.3
December 31, 2010		9.2		-		9.2

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

6. Financing Receivables (continued)

The allowance for doubtful accounts and the related financing receivables for the quarter ended September 30, 2011 were as follows (U.S. dollars in millions):

	Quarter ended			Nine months ended
	September 30, 2011			September 30, 2011
Allowance for advances to growers:
Balance, beginning of period	$	3.7		$	4.0
Deductions to allowance including
recoveries		(0.3	)		(0.6	)
Balance, end of period	$	3.4		$	3.4

Allowance for notes receivable:
Balance, beginning of period	$	-		$	0.6
Deductions to allowance including
recoveries		-			(0.6	)
Balance, end of period	$	-		$	-

7. Uncertain Tax Position

During the nine months ended September 30, 2011, there was a net increase of $3.6 million of uncertain tax positions including interest and penalties of $1.7 million, of which $3.7 million will affect the effective tax rate. The increase is primarily related to an accrual of $3.8 million, including $1.5 million of interest and penalties related to a position in a foreign jurisdiction, affecting the years 2005 and 2006, that is no longer at more likely than not of being sustained. This position is expected to be settled within the next 12 months.

8. Stock-Based Compensation

On May 5, 2011, our shareholders approved and ratified the 2011 Omnibus Share Incentive Plan (the “2011 Plan”). Under the 2011 Plan, the Board of Directors is authorized to grant options to purchase up to 2,500,000 ordinary shares and grant up to 500,000 restricted stock units or other stock based awards that are not options.

Stock-based compensation expense included in selling, general and administrative expenses related to stock options on a straight-line, single-award basis and restricted stock awards included in the accompanying Consolidated Statements of Income was as follows (U.S. dollars in millions, except per share data):

	Quarter ended				Nine months ended
	September 30,		October 1,		September 30,		October 1,
	2011		2010		2011		2010

Stock-based compensation expense	$	3.5	$	1.6	$	7.4	$	6.1

Stock-based compensation expense per diluted share	$	0.06	$	0.03	$	0.12	$	0.10

We are in a net operating loss carry-forward position in the relevant jurisdictions. Therefore, for the quarter and nine months ended September 30, 2011, excess share-based payment deductions resulting from stock options exercised in these periods have not been realized through a reduction in taxes currently payable or related effect on cash flows. Proceeds of $21.8 million and $0.8 million were received from the exercise of stock options for the nine months ended September 30, 2011 and October 1, 2010, respectively.

The following table lists the various stock option grants occurring for the nine months ended September 30, 2011 and October 1, 2010:

Stock Option Grant	Number of Options Granted		Exercise Price		Fair Value
August 3, 2011 - Employees		920,000	$	23.76	$	9.57
March 2, 2011 - Chairman and Chief Executive Officer		161,000		26.67		9.57
March 3, 2010 - Chairman and Chief Executive Officer		161,000		20.13		7.46

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

8. Stock-Based Compensation (continued)

All stock options were granted from our 1999 Share Incentive Plan and 2011 Plan and may be exercised over a period not in excess of 10 years. These options vested 20% on the applicable grant date and will vest an additional 20% on each of the first four anniversaries of the applicable grant dates.

Under our 2010 Non-Employee Directors Equity Plan (the “Directors Equity Plan”), we may award restricted stock to non-employee members of our Board of Directors. Awards of restricted stock will be made on the first business day of each calendar year beginning in 2011, with exception of the initial award which was granted on May 5, 2010. A share of restricted stock is one ordinary share of the Company that has restrictions on transferability until certain vesting conditions have been met. The number of ordinary shares that may be covered by awards granted under the Directors Equity Plan is limited to a total of 150,000 ordinary shares.

50% of each award of restricted stock granted under the Directors Equity Plan will vest on the date on which it was granted. The remaining 50% of each award will vest upon the six-month anniversary of the date on which the recipient ceases to serve as a member of the Board of Directors. The provision in the Director’s Equity Plan that allows directors to retain all of their awards once they cease to serve as a member of the Board of Directors is considered a nonsubstantive service condition in accordance with the guidance provided by the ASC on “Compensation – Stock Compensation”. Accordingly, we recognize compensation cost immediately for restricted stock awards granted to non-management members of the Board of Directors.

On January 3, 2011, we awarded 27,853 shares from our Directors Equity Plan at a price of $25.14 per share. On May 5, 2010, we awarded 32,956 restricted shares from our Directors Equity Plan at a price of $21.24 per share. Stock-based compensation expense of $0.7 million was recognized on the grant date for each grant of restricted shares.

9. Inventories

Inventories consisted of the following (U.S. dollars in millions):

	September 30,		December 31,
	2011		2010
Finished goods	$	124.3	$	138.8
Raw materials and packaging supplies		144.6		134.1
Growing crops		132.8		137.5
Total inventories	$	401.7	$	410.4

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

10. Long-Term Debt and Capital Lease Obligations

The following is a summary of long-term debt and capital lease obligations (U.S. dollars in millions):

	September 30,			December 31,
	2011			2010
Senior secured revolving credit facility (see Credit Facility below)	$	104.7		$	285.0
Various other notes payable		6.9			7.2
Capital lease obligations		1.8			3.4
Total long-term debt and capital lease obligations		113.4			295.6
Less: Current portion		(5.1	)		(5.3	)
Long-term debt and capital lease obligations	$	108.3		$	290.3

On July 17, 2009, we entered into a senior-secured revolving credit facility (the “Credit Facility”), with Rabobank Nederland, New York Branch, as administrative agent and lead arranger. The following is a summary of the material terms of the Credit Facility and other working capital facilities (U.S. dollars in millions):

	Term	Maturity Date	Interest Rate at September 30, 2011	Borrowing Limit		Available Borrowings

Credit Facility	3.5 years	January 17, 2013	1.74%	$	300.0	$	179.9
Other working capital facilities	Varies	Varies	Varies		20.0		18.6
				$	320.0	$	198.5

The Credit Facility includes a swing line facility and a letter of credit facility with a $100 million sublimit. Borrowings under the Credit Facility bear interest at a spread over the London Interbank Offer Rate (“LIBOR”) that varies with our leverage ratio. The Credit Facility is collateralized directly or indirectly by substantially all of our assets and is guaranteed by certain of our subsidiaries. On March 28, 2011, we amended the Credit Facility by lowering the applicable margins over LIBOR or Base rate borrowings that vary with our leverage ratio. Effective August 8, 2011, we voluntarily lowered the borrowing limit on the Credit Facility from $500.0 to $300.0 million in order to reduce our unused commitment fees. As a result of the voluntary reduction of our borrowing limit, we proportionately reduced debt issuance costs by $1.2 million. This write-off is included in interest expense in the accompanying Consolidated Statements of Income.

The Credit Facility requires us to be in compliance with financial and other covenants, including limitations on capital expenditures, the amount of dividends that can be paid in the future, the amount and types of liens and indebtedness, material asset sales and mergers. As of September 30, 2011, we were in compliance with all of the covenants contained in the Credit Facility. The Credit Facility permits borrowings under the revolving commitment with an interest rate determined based on our leverage ratio and spread over LIBOR. In addition, we pay a fee on unused commitments.

At September 30, 2011, we applied $15.4 million to the letter of credit facility, comprised primarily of certain contingent obligations and other governmental agency guarantees combined with guarantees for purchases of raw materials and equipment. Included in the letter of credit facility, $1.0 million relates to a debt guarantee for a VIE. We also had $8.9 million in other letters of credit and bank guarantees not included in the letter of credit facility. Refer to Note 5, “Variable Interest Entities”, for further discussion of VIEs.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

11. Comprehensive Income

The following table sets forth comprehensive income for the quarter and nine months ended September 30, 2011 and October 1, 2010 (U.S. dollars in millions):


	Quarter ended						Nine months ended
	September 30,			October 1,			September 30,			October 1,
	2011			2010			2011			2010
Comprehensive income:
Net income	$	12.9		$	13.4		$	105.7		$	71.5
Net unrealized gain (loss) on derivatives		17.8			(38.7	)		14.2			(36.8	)
Net unrealized foreign currency
translation (loss) gain		(10.9	)		14.7			(0.8	)		9.6
Net change in retirement benefit
adjustment, net of tax		0.3			(0.1	)		0.6			(0.1	)
Comprehensive income (loss)		20.1			(10.7	)		119.7			44.2

Less: comprehensive income (loss) attributable to noncontrolling interests		0.4			(0.7	)		3.2			0.5
Comprehensive income (loss) attributable to Fresh Del Monte Produce Inc.	$	19.7		$	(10.0	)	$	116.5		$	43.7

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

12. Commitments and Contingencies

DBCP Litigation

Beginning in December 1993, certain of our U.S. subsidiaries were named among the defendants in a number of actions in courts in Texas, Louisiana, Hawaii, California and the Philippines involving claims by numerous non-U.S. plaintiffs alleging that they were injured as a result of exposure to a nematocide containing the chemical dibromochloropropane (“DBCP”) during the period 1965 to 1990. As a result of a settlement entered into in December 1998, the remaining unresolved DBCP claims against our U.S. subsidiaries are pending in Hawaii, Louisiana and California.

In 1997, plaintiffs from Costa Rica and Guatemala named certain of our U.S. subsidiaries in a purported class action in Hawaii. On June 28, 2007, plaintiffs voluntarily dismissed our U.S. subsidiaries named in the action without ties to Hawaii. At a hearing held on June 9, 2009, the court granted summary judgment in favor of our remaining U.S. subsidiaries with ties to Hawaii, holding that the claims of the remaining plaintiffs are time-barred. A final judgment dismissing all remaining claims and terminating the action was entered on July 28, 2010. On August 24, 2010, plaintiffs filed a notice of appeal. The appeal is fully briefed and remains pending.

On November 15, 1999, one of our subsidiaries was served in two actions entitled Godoy Rodriguez, et al. v. AMVAC Chemical Corp., et al. and Martinez Puerto, et al. v. AMVAC Chemical Corp., et al., in the 29th Judicial District Court for the Parish of St. Charles, Louisiana. At this time, it is not known how many of the approximately 315 remaining Godoy Rodriguez and Martinez Puerto plaintiffs are making claims against our subsidiary.

On October 14, 2004, two of our subsidiaries were served with a complaint in an action styled Angel Abarca, et al. v. Dole Food Co., et al. filed in the Superior Court of the State of California for the County of Los Angeles on behalf of more than 2,600 Costa Rican banana workers who claim injury from exposure to DBCP. An initial review of the plaintiffs in the Abarca action found that a substantial number of the plaintiffs were claimants in prior DBCP actions in Texas and may have participated in the settlement of those actions. On June 27, 2008, the court dismissed the claims of 1,329 plaintiffs who were parties to prior DBCP actions. On June 30, 2008, our subsidiaries moved to dismiss the claims of the remaining Abarca plaintiffs on grounds of forum non conveniens in favor of the courts of Costa Rica. Hearings on the motion to dismiss were held on February 24, 2009, May 19, 2009 and September 17, 2009. On September 22, 2009, the court granted the motion conditionally dismissing the claims of those remaining plaintiffs who allege employment on farms in Costa Rica affiliated with our subsidiaries.

On April 25, 2005, two of our subsidiaries were served with a complaint styled Juan Jose Abrego, et al. v. Dole Food Company, et al. filed in the Superior Court of the State of California for the County of Los Angeles on behalf of 955 Guatemalan residents who claim injury from exposure to DBCP. An initial review of the plaintiffs in the Abrego action found that a substantial number of the plaintiffs were claimants in prior DBCP actions and may have participated in the settlement of those actions. On June 27, 2008, the court dismissed the claims of 206 plaintiffs who were parties to prior DBCP actions. On October 1, 2009, our subsidiaries joined a motion to dismiss the claims of the remaining Abrego plaintiffs on grounds of forum non conveniens in favor of the courts of Michigan. On December 15, 2009, the court granted the joint motion. On February 16, 2010, plaintiffs appealed the court's dismissal of the action. On December 29, 2010, the appellate court affirmed the Superior Court’s dismissal of the remaining plaintiffs, who have sought review of the dismissal by the California Supreme Court, which was denied. To date plaintiffs have not filed their claims with the courts of Michigan.

On January 2, 2009, three of our subsidiaries were served with multiple complaints in related actions styled Jorge Acosta Cortes, et al. v. Dole Food Company, et al. filed in the Superior Court of the State of California for the County of Los Angeles on behalf of 461 Costa Rican residents, 389 Guatemalan residents, 962 Panamanian residents and 673 Honduran residents who claim injury from exposure to DBCP. We and our subsidiaries have never owned, managed or otherwise been involved with any banana growing operations in Panama or Honduras. Accordingly, the Panamanian and Honduran plaintiffs filed requests to dismiss our subsidiaries without prejudice on March 26, 2009. The claims of the new Costa Rican plaintiffs were consolidated with those of the Costa Rican plaintiffs in Abarca and conditionally dismissed as in the Abarca case. Similarly, the claims of the new Guatemalan plaintiffs were consolidated with those of the Guatemalan plaintiffs in Abrego and dismissed in favor of the courts of Michigan as in the Abrego case.

On July 13, 2011, one of our subsidiaries was served with multiple complaints filed in the United States District Court for the Eastern District of Louisiana on behalf of 121 Panamanian residents, 72 Costa Rican residents and 68 Ecuadorian residents who claim injury from exposure to DBCP. On October 17, 2011, our subsidiary filed its answer to the complaint.

In February 2011, a group of former banana cooperative workers from the Philippines filed a complaint in the Philippines against two of our subsidiaries claiming injury from exposure to DBCP. The trial court dismissed the complaint against our subsidiaries on October 3, 2011. In August 2011, the same group of former banana workers from the Philippines filed a complaint in the Superior Court of the State of California for the County of Los Angeles against one of our subsidiaries again claiming injury from exposure to DBCP.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

12. Commitments and Contingencies (continued)

Pineapple Class Action Litigation

On August 2, 2004, a consolidated complaint was filed against two of our subsidiaries in the U.S. District Court for the Southern District of New York. This consolidated action was brought as a putative class action on behalf of all direct and indirect purchasers of Del Monte Gold® Extra Sweet pineapples from March 1, 1996 through the present and merges four actions brought by fruit wholesalers and two actions brought by individual consumers. The consolidated complaint alleges claims for: (i) monopolization and attempted monopolization; (ii) restraint of trade; (iii) unfair and deceptive trade practices; and (iv) unjust enrichment. On May 27, 2005, our subsidiaries filed a motion to dismiss the indirect and direct purchasers’ claims for unjust enrichment. On June 29, 2005, plaintiffs filed a joint motion for class certification. On February 20, 2008, the court denied plaintiffs’ motion for class certification of the indirect purchasers and only granted class certification of the direct purchasers’ claims for monopolization and attempted monopolization, which was uncontested by our subsidiaries. Also on February 20, 2008, the court granted the motion of our subsidiaries to dismiss the direct purchasers’ claims for unjust enrichment and denied as moot the motion to dismiss the indirect purchasers’ state law claims on the basis of the court’s denial of plaintiffs’ motion for class certification of the indirect purchasers. On August 13, 2008, our subsidiaries filed a motion for summary judgment on plaintiffs’ remaining claims. Plaintiffs filed an opposition to the motion on October 6, 2008, which our subsidiaries replied to on December 8, 2008. On September 30, 2009, the court granted the motion for summary judgment in favor of our subsidiaries. On October 29, 2009, plaintiffs filed a notice of appeal. On November 3, 2010, the appellate court affirmed the District Court’s decision granting summary judgment in favor of our subsidiaries.

On March 5, 2004, an alleged individual consumer filed a putative class action complaint against our subsidiaries in the state court of Tennessee on behalf of consumers who purchased (other than for resale) Del Monte Gold® Extra Sweet pineapples in Tennessee from March 1, 1996 to May 6, 2003. The complaint alleges violations of the Tennessee Trade Practices Act and the Tennessee Consumer Protection Act. On February 18, 2005, our subsidiaries filed a motion to dismiss the complaint. On May 15, 2006, the court granted the motion in part, dismissing plaintiffs’ claim under the Tennessee Consumer Protection Act.

Between March 17, 2004 and March 18, 2004, three alleged individual consumers separately filed putative class action complaints against us and our subsidiaries in the state court of California on behalf of residents of California who purchased (other than for re-sale) Del Monte Gold® Extra Sweet pineapples between March 1, 1996 and May 6, 2003. On November 9, 2005, the three actions were consolidated under one amended complaint with a single claim for unfair competition in violation of the California Business and Professional Code. On September 26, 2008, plaintiffs filed a motion to certify a class action. On August 20, 2009, the court denied class certification. On October 19, 2009, plaintiffs filed a notice of appeal of the court’s order denying class certification, which appeal remains pending.

On April 19, 2004, an alleged individual consumer filed a putative class action complaint against our subsidiaries in the state court of Florida on behalf of Florida residents who purchased (other than for re-sale) Del Monte Gold® Extra Sweet pineapples between March 1, 1996 and May 6, 2003. The only surviving claim under the amended complaint alleges violations of the Florida Deceptive and Unfair Trade Practices Act relating only to pineapples purchased since April 19, 2000. Our subsidiaries filed an answer to the surviving claim on October 12, 2006. On August 5, 2008, plaintiffs filed a motion to certify a class action. Our subsidiaries filed an opposition on January 22, 2009 to which plaintiffs filed a reply on May 11, 2009.

European Union Antitrust Investigation

On June 2, 2005, one of our German subsidiaries was visited by the antitrust authority of the European Union (“EU”) as part of its investigation of certain of our overseas subsidiaries as well as other produce companies for possible violations of the EU’s competition laws. Our subsidiaries cooperated fully with the investigation. On October 17, 2008, the European Commission concluded its investigation without finding any infringement of EU competition rules by, or imposing any fines on, our subsidiaries.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

12. Commitments and Contingencies (continued)

The European Commission did, however, find that Internationale Fruchtimport Gesellschaft Weichert & Co KG (“Weichert”), an entity in which one of our subsidiaries formerly held an indirect 80% noncontrolling interest, infringed EU competition rules and imposed upon it a €14.7 million ($19.7 million using exchange rates as of September 30, 2011) fine. The European Commission has asserted that we controlled Weichert during the period by virtue of our subsidiary’s former, indirect noncontrolling interest and has therefore held that we are jointly and severally liable for Weichert’s payment of the fine. On December 31, 2008, we filed an appeal of this determination on grounds, among others, that Weichert did not violate EU competition rules and that, in any event, we cannot be held jointly and severally liable for Weichert’s acts under applicable German law. On April 14, 2010, Weichert filed a statement of intervention in support of our appeal and seeking annulment of the European Commission’s determination.

Breach of Contract Litigation

On July 31, 2003, Net Results, Inc., a consulting company, filed a complaint alleging breach of contract against one of our subsidiaries in an action styled Net Results, Inc. v. Del Monte Fresh Produce Company in the Eleventh Judicial Circuit of Florida (Miami-Dade County, Florida). On April 15, 2008, the plaintiff amended its complaint to include an additional claim of anticipatory repudiation and sought a significant amount of damages. Our subsidiary denied liability and brought a counterclaim against the plaintiff. In November 2009, the jury returned a verdict in favor of the plaintiff in the amount of $10 million. Our subsidiary’s post-trial motions requested, among other things, that the jury’s verdict be set aside and that judgment be entered in favor of our subsidiary. On March 25, 2010, the trial court denied the motions and entered a final judgment in the amount of $15.7 million (plus attorneys’ fees). On April 15, 2010, our subsidiary appealed the judgment. The oral argument hearing on the appeal of our subsidiary was held on July 13, 2011. On October 19, 2011, the Third District Court of Appeal for the State of Florida ruled in favor of the appeal of our subsidiary and reversed and remanded the case for a new trial on damages.

Kunia Well Site

In 1980, elevated levels of certain chemicals were detected in the soil and ground-water at a plantation leased by one of our U.S. subsidiaries in Honolulu, Hawaii (the “Kunia Well Site”). Shortly thereafter, our subsidiary discontinued the use of the Kunia Well Site and provided an alternate water source to area well users and the subsidiary commenced its own voluntary cleanup operation. In 1993, the Environmental Protection Agency (“EPA”) identified the Kunia Well Site for potential listing on the National Priorities List (“NPL”) under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. On December 16, 1994, the EPA issued a final rule adding the Kunia Well Site to the NPL.

On September 28, 1995, our subsidiary entered into an order (the “Order”) with the EPA to conduct the remedial investigation and the feasibility study of the Kunia Well Site. Under the terms of the Order, our subsidiary submitted a remedial investigation report in November 1998 and a final draft feasibility study in December 1999 (which was updated from time to time) for review by the EPA. The EPA approved the remedial investigation report in February 1999 and the feasibility study on April 22, 2003.

As a result of communications with the EPA in 2001, we recorded a charge of $15.0 million in the third quarter of 2001 to increase the recorded liability to the estimated expected future cleanup cost for the Kunia Well Site to $19.1 million. Based on conversations with the EPA in the third quarter of 2002 and consultation with our legal counsel and other experts, we recorded a charge of $7.0 million during the third quarter of 2002 to increase the accrual for the expected future clean-up costs for the Kunia Well Site to $26.1 million.

On September 25, 2003, the EPA issued the Record of Decision (“ROD”). The EPA estimates in the ROD that the remediation costs associated with the cleanup of the Kunia Well Site will range from $12.9 million to $25.4 million and will last approximately 10 years. The undiscounted estimates are between $14.8 million and $28.7 million. The undiscounted estimate on which our accrual is based totals $22.7 million and is discounted using a 5.0% rate. As of September 30, 2011, there is $16.7 million included in other noncurrent liabilities and $1.0 million included in accounts payable and accrued expenses in the Consolidated Balance Sheets for the Kunia Well Site clean-up. We expect to expend approximately $1.0 million in cash in the next 12 months and $0.5 million in cash per year for the following five years. Certain portions of the EPA’s estimates have been discounted using a 5.0% interest rate.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

12. Commitments and Contingencies (continued)

On January 13, 2004, the EPA deleted a portion of the Kunia Well Site (Northeast section) from the NPL. On May 2, 2005, our subsidiary signed a Consent Decree with the EPA for the performance of the clean-up work for the Kunia Well Site. On September 27, 2005, the U.S. District Court for Hawaii approved and entered the Consent Decree. Based on findings from remedial investigations at the Kunia Well Site, our subsidiary continues to evaluate with the EPA the clean-up work currently in progress in accordance with the Consent Decree.

Additional Information

At this time, management is not able to evaluate the likelihood of a favorable or unfavorable outcome in any of the above-described matters. Accordingly, management is not able to estimate the range or amount of loss, if any, from any of the above-described matters and no accruals or expenses have been recorded for these matters as of September 30, 2011, except as related to the Kunia Well Site.

In addition to the foregoing, we are involved from time to time in various claims and legal actions incident to our operations, both as plaintiff and defendant. In the opinion of management, after consulting with legal counsel, none of these other claims are currently expected to have a material adverse effect on the results of operations, financial position or our cash flows.

We intend to vigorously defend ourselves in all of the above matters.

13. Earnings Per Share

Basic and diluted net income per ordinary share is calculated as follows (U.S. dollars in millions, except share and per share data):

	Quarter ended				Nine months ended
	September 30,		October 1,		September 30,		October 1,
	2011		2010		2011		2010
Numerator:
Net income attributable to Fresh Del Monte Produce Inc.	$	12.2	$	14.5	$	102.6	$	71.8

Denominator:
Weighted average number of ordinary shares - Basic		59,393,954		60,735,357		59,266,561		61,984,107
Effect of dilutive securities - employee stock options		116,875		184,269		289,881		165,581
Weighted average number of ordinary shares - Diluted		59,510,829		60,919,626		59,556,442		62,149,688

Net income per ordinary share attributable to
Fresh Del Monte Produce Inc.:
Basic	$	0.21	$	0.24	$	1.73	$	1.16
Diluted	$	0.21	$	0.24	$	1.72	$	1.16

Ordinary share activity for the quarter and nine month period is summarized as follows:

	Quarter ended						Nine months ended
	September 30,			October 1,			September 30,			October 1,
	2011			2010			2011			2010
Ordinary shares issued/ (retired) as a result of:
Stock option exercises		39,000			45,000			1,148,105			59,472
Restricted stock grants		-			-			27,853			32,956
Treasury share retirement		(1,636,296	)		(1,264,921	)		(1,636,296	)		(3,631,600	)

Refer to Note 18, “Shareholders’ Equity”, for disclosures related to the stock repurchase program and retired shares.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

14. Retirement and Other Employee Benefits

The following table sets forth the net periodic benefit costs of our pension plans and post-retirement plans (U.S. dollars in millions):

	Quarter ended						Nine months ended
	September 30,			October 1,			September 30,			October 1,
	2011			2010			2011			2010
Service cost	$	0.9		$	0.8		$	2.7		$	2.4
Interest cost		1.7			1.8			5.2			5.6
Expected return on assets		(1.0	)		(0.8	)		(2.9	)		(2.6	)
Amortization of net actuarial loss		0.4			0.3			1.1			0.8
Net periodic benefit costs	$	2.0		$	2.1		$	6.1		$	6.2

We funded our U.S. based non-contributory defined benefit pension plan by $1.2 million during the nine months ended September 30, 2011. The funding was actuarially determined based on U.S. funding regulations.

15. Business Segment Data

We are principally engaged in one major line of business, the production, distribution and marketing of bananas, other fresh produce and prepared food. Our products are sold in markets throughout the world, with our major producing operations located in North, Central and South America, Europe, Asia and Africa.

Our operations are aggregated into business segments on the basis of our products: bananas, other fresh produce and prepared food. Other fresh produce includes pineapples, melons, non-tropical fruit (including grapes, apples, pears, peaches, plums, nectarines, avocados, citrus and kiwis), fresh-cut products, other fruit and vegetables, a third-party ocean freight business, a plastic product and box manufacturing business and a grain business. During the fourth quarter of 2010, we sold the grain silos and exited the grain business. Prepared food includes prepared fruit and vegetables, juices, beverages, snacks, poultry and meat products.

As a result of our decision to exit grain operations during 2010 and the elimination of third-party ocean freight services from Northern Europe to the Caribbean during 2009 and due to the relative size of the remaining operations, we have combined the other products and services segment with the other fresh produce segment in 2011. Prior year amounts have been reclassified to conform to the 2011 presentation. We evaluate performance based on several factors, of which net sales and gross profit by product are the primary financial measures (U.S. dollars in millions):

	Quarter ended
	September 30, 2011					October 1, 2010
	Net Sales		Gross Profit (Loss)			Net Sales		Gross Profit (Loss)
Banana	$	375.1	$	(1.0	)	$	370.1	$	(6.7	)
Other fresh produce		337.0		52.1			329.4		45.2
Prepared food		83.1		11.8			93.6		13.5
Totals	$	795.2	$	62.9		$	793.1	$	52.0

	Nine months ended
	September 30, 2011				October 1, 2010
	Net Sales		Gross Profit		Net Sales		Gross Profit
Banana	$	1,268.7	$	91.3	$	1,225.0	$	42.2
Other fresh produce		1,266.1		151.7		1,244.9		153.5
Prepared food		274.1		45.6		266.3		37.1
Totals	$	2,808.9	$	288.6	$	2,736.2	$	232.8

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

16. Derivative Financial Instruments

We account for derivative financial instruments in accordance with the ASC guidance on “Derivatives and Hedging”. This ASC requires us to recognize the value of derivative instruments as either assets or liabilities in the statement of financial position at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated as a hedge and qualifies as part of a hedging relationship. The accounting also depends on the type of hedging relationship, whether a cash flow hedge, a fair value hedge, or hedge of a net investment in a foreign operation. On entry into a derivative instrument, we formally designate and document it as a hedge of a specific underlying exposure, as well as the risk management objectives and strategies for undertaking the hedge transaction.

Derivatives are recorded in the Consolidated Balance Sheets at fair value in prepaid expenses and other current assets, other noncurrent assets, accounts payable and accrued expenses or other noncurrent liabilities, depending on whether the amount is an asset or liability and whether it is short-term or long-term in nature. The fair values of derivatives used to hedge or modify our risks fluctuate over time. These fair value amounts should not be viewed in isolation, but rather in relation to the cash flows or fair value of the underlying hedged transactions or assets and other exposures, as well as the overall reduction in our risk. In addition, the earnings impact resulting from our derivative instruments is recorded in the same line item within the Consolidated Statements of Income as the underlying exposure being hedged.

We predominantly designate our hedges as cash flow hedges. A cash flow hedge requires that the effective portion of the change in the fair value of a derivative instrument be recognized in other comprehensive income, a component of shareholders’ equity, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the change in fair value of a derivative instrument is to be recognized in earnings in the same line in which the hedge transaction affects earnings.

Counterparties expose us to credit loss in the event of non-performance on hedges. We monitor our exposure to counterparty non-performance risk both at inception of the hedge and at least quarterly thereafter. However, because the contracts are entered into with highly rated financial institutions, we do not anticipate non-performance by any of these counterparties. The exposure is usually the amount of the unrealized gains, if any, in such contracts.

Because of the high degree of effectiveness between the hedging instrument and the underlying exposure being hedged, fluctuations in the value of the derivative instruments are generally offset by changes in the cash flows or fair value of the underlying exposures being hedged. In addition, we perform an assessment of hedge effectiveness, both at inception and at least quarterly thereafter, in order to determine whether the financial instruments that are used in hedging transactions are effective at offsetting changes in the cash flows or fair value of the related underlying exposures. Any ineffective portion of a financial instrument’s change in fair value is immediately recognized in earnings.

Foreign Currency Hedges

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 with forward contracts, which generally expire within one year. Certain of our foreign currency hedges were entered into to hedge our 2011 and 2012 foreign currency exposure.

The foreign currency forward contracts qualifying as cash flow hedges were designated as single-purpose cash flow hedges of forecasted cash flows. Based on our formal assessment of hedge effectiveness of our qualifying foreign currency forward contracts, we determined that the impact of hedge ineffectiveness was de minimis for the quarters and nine month periods ended September 30, 2011 and October 1, 2010, respectively.

Bunker Fuel Hedges

We are exposed to fluctuations in bunker fuel prices on our results of operations and financial condition and mitigate that exposure by entering into bunker fuel swap agreements, which permit us to lock in bunker fuel purchase prices. One of our subsidiaries entered into bunker fuel swap agreements in order to hedge fuel costs incurred by our owned and chartered vessels through 2010. We designated our bunker fuel swap agreements as cash flow hedges. We have not entered into any bunker fuel hedges during 2011 to hedge our fuel costs for 2011 or beyond.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

16. Derivative Financial Instruments (continued)

Certain of our derivative instruments contain provisions that require the current credit relationship between the Company and its counterparty to be maintained throughout the term of the derivative instruments. If that credit relationship changes, certain provisions could be triggered, and the counterparty could request immediate collateralization of derivative instruments in net liability position above a certain threshold. The aggregate fair value of all derivative instruments with a credit-risk-related contingent feature that are in a liability position on September 30, 2011 is $19.4 million. As of September 30, 2011, no triggering event has occurred and thus we are not required to post collateral. If the credit-risk-related contingent features underlying these agreements were triggered on September 30, 2011, the entity would not be required to post $19.4 million of collateral to its counterparty because the collateralization threshold has not been met.

We had the following outstanding foreign currency forward contracts as of September 30, 2011:

	Notional Amount
Foreign Currency Contracts Qualifying as Cash Flow Hedges:
Euro	€	236.2 million
British pound	£	12.7 million
Japanese yen	JPY	13,261.1 million
Polish zloty	PLN	2.2 million
Costa Rican colon	CRC	31,500.0 million
Chilean peso	CLP	7,283.7 million
Brazilian real	BRL	22.2 million
Kenya shilling	KES	1,704.7 million

The following table reflects the fair values of derivative instruments as of September 30, 2011 and December 31, 2010 (U.S. dollars in millions):

Derivatives Designated as Hedging Instruments (1)(2)
	Foreign exchange contracts
Balance Sheet Location:	September 30, 2011		December 31, 2010
Asset derivatives:
Prepaid expenses and other current assets	$	15.1	$	4.1
Other noncurrent assets		2.6		-
Total asset derivatives	$	17.7	$	4.1

Liability derivatives:
Accounts payable and accrued expenses	$	18.4	$	13.6
Other noncurrent liabilities		3.6		9.1
Total liability derivatives	$	22.0	$	22.7

(1) We expect that $3.3 million of the net fair value of hedges recognized as a net loss in accumulated other comprehensive income ("AOCI") will be transferred to earnings during the next 12 months and $1.0 million will be transferred to earnings during 2012 along with the effect of the related forecasted transaction.

(2) See Note 17, "Fair Value Measurements", for fair value disclosures.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

16. Derivative Financial Instruments (continued)

The following table reflects the effect of derivative instruments on the Consolidated Statements of Income for the quarters ended September 30, 2011 and October 1, 2010, respectively (U.S. dollars in millions):

Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)						Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
	Quarter ended							Quarter ended
	September 30, 2011			October 1, 2010				September 30, 2011			October 1, 2010
Foreign exchange contracts	$	20.7		$	(39.9	)	Net sales	$	(6.4	)	$	3.7
Foreign exchange contracts		(2.8	)		-		Cost of products sold		0.3			-
Bunker fuel swap agreements (1)		-			1.2		Cost of products sold		-			0.8

Total	$	17.9		$	(38.7	)		$	(6.1	)	$	4.5

	Nine months ended							Nine months ended
	September 30, 2011			October 1, 2010				September 30, 2011			October 1, 2010
Foreign exchange contracts	$	16.2		$	(32.6	)	Net sales	$	(18.6	)	$	19.7
Foreign exchange contracts		(2.0	)		(0.9	)	Cost of products sold		0.7			0.9
Bunker fuel swap agreements (1)		-			(3.3	)	Cost of products sold		-			2.4

Total	$	14.2		$	(36.8	)		$	(17.9	)	$	23.0

(1) The bunker fuel swap agreements had an inneffective portion of less than $0.1 million for the quarter ended October 1, 2010.

During the nine months ended September 30, 2011, one of our subsidiaries entered into a foreign currency forward contract denominated in Korean won that did not qualify for cash flow hedge accounting. We recognized a gain of $0.4 million in other expense, net for the quarter and zero impact for the nine months ended September 30, 2011, respectively, on our Consolidated Statements of Income related to this contract. This contract has settled as of September 30, 2011.

17. Fair Value Measurements

We measure fair value for financial instruments, such as derivatives, on an ongoing basis. We measure fair value for non-financial assets when a valuation is necessary, such as for impairment of long-lived and indefinite-lived assets when indicators of impairment exist. Fair value is measured in accordance with the ASC on “Fair Value Measurements and Disclosures”. The ASC on “Fair Value Measurements and Disclosures” defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measures required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value.

Fair Value of Derivative Instruments

We may choose to mitigate the risk of fluctuations in currency exchange rates and bunker fuel prices on our results of operations and financial condition by entering into foreign currency cash flow hedges and bunker fuel hedges, respectively. We account for the fair value of the related forward contracts as either an asset in other current assets or a liability in accrued expenses. We use an income approach to value our outstanding foreign currency and bunker fuel cash flow hedges. An income approach consists of a discounted cash flow model that takes into account the present value of future cash flows under the terms of the contracts using current market information as of the measurement date such as foreign currency and bunker fuel spot and forward rates. Additionally, an element of default risk based on observable inputs was built into the fair value calculation.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

17. Fair Value Measurements (continued)

The following table provides a summary of the fair values of assets and liabilities measured on a recurring basis under the ASC on “Fair Value Measurements and Disclosures” (U.S. dollars in millions):

	Fair Value Measurements
	Foreign currency forward contracts, net liability

	September 30, 2011		December 31, 2010

Quoted Prices in Active Markets for Identical Assets (Level 1)	$	-	$	-

Significant Observable Inputs (Level 2)		4.3		18.6

Significant Unobservable Inputs (Level 3)		-		-

In estimating our fair value disclosures for financial instruments, we use the following methods and assumptions:

Cash and cash equivalents: The carrying amount of these items approximates fair value due to their liquid nature.

Trade accounts receivable and other accounts receivable, net: The carrying value reported in the Consolidated Balance Sheets for these items is net of allowances for doubtful accounts, which includes a degree of counterparty non-performance risk.

Accounts payable and other current liabilities: The carrying value reported in the Consolidated Balance Sheets for these items approximates their fair value, which is the likely amount for which the liability with short settlement periods would be transferred to a market participant with a similar credit standing as the Company.

Capital lease obligations: The carrying value of our capital lease obligations reported in the Consolidated Balance Sheets approximates their fair value based on current interest rates, which contain an element of default risk. Refer to Note 10, “Long-Term Debt and Capital Lease Obligations”.

Long-term debt: The carrying value of our long-term debt reported in the Consolidated Balance Sheets approximates their fair value since they bear interest at variable rates or fixed rates which contain an element of default risk. Refer to Note 10, “Long-Term Debt and Capital Lease Obligations”.

Fair Value of Non-Financial Assets

During the third quarter of 2011, we recognized $0.7 million in contract termination costs as a result of the closure of a distribution facility in the United Kingdom in the banana segment. We estimate the fair value of this obligation using an income based approach, whereby our cash flows are adjusted for a market premium risk. The income based approach utilized unobservable inputs and such is classified as Level 3 of the fair value hierarchy.

During the second quarter of 2011, we recognized $7.7 million in impairment charges related to the melon program rationalization. The carrying value of these assets was $10.5 million including $7.2 million in property, plant and equipment consisting primarily of buildings and machinery and equipment and $3.3 million of melon goodwill. Property, plant and equipment were written down to a fair value of $2.8 million. We estimated the fair value of these assets using the income based approach considering the cash flows that would be obtained as a result of the production and distribution of melons in areas of continued production. The income based approach utilizes unobservable inputs. Due to the use of unobservable inputs, we classify the fair value of these growing areas within Level 3 of the fair value hierarchy.

As a result of the decision to discontinue planting certain melon varieties in Central America, which significantly reduced melon volumes in the future, we estimated an implied fair value of the melon reporting unit’s goodwill by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill (including any unrecognized intangible assets). This exercise yielded a write-off of the melon goodwill of $3.3 million.

The fair value of the prepared food unit’s goodwill and trademarks is highly sensitive to differences between the estimated and actual cash flows and changes in the related discount rate used to evaluate the fair value of these assets. We disclosed the sensitivities related to the prepared food unit’s goodwill in our annual financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2010.

During the quarter ended October 1, 2010, we recognized an impairment charge of $1.4 million related to the DEL MONTE® indefinite-lived intangible of a perpetual, royalty-free brand name license due to lower than expected sales volumes and pricing in the United Kingdom in the prepared food segment specifically related to beverage products. An income-based approach was used to value the trademark intangible, which measures the fair value of an intangible asset by capitalizing the royalties saved due to ownership of the intangible asset rather than paying a rent or royalty for the use of the asset. This income-based approach referred to as the royalty savings method utilizes internal unobservable inputs such as a discounted net sales cash flow model with the application of a royalty savings rate assumption corroborated by a mix of internal and market inputs.

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

17. Fair Value Measurements (continued)

During the second quarter of 2010, we entered into an agreement to sell substantially all the assets of our South Africa canning operations. As a result, we recognized a $16.6 million asset impairment of our investment in South Africa in the prepared food reporting segment. The carrying value of our investment in South Africa was $24.4 million, including cumulative translation adjustments, and was written down to a fair value of $7.8 million. We estimated the fair value of the underlying assets by using the market approach.

The market approach uses prices and other relevant information generated by market transactions involving comparable assets. We used observable inputs based on market participant information related to the sale of South African assets and, as such, we classifed the fair value of the investment in South Africa within Level 2 of the fair value hierarchy. We received the regulatory approval for the sale of our South Africa canning operations effective October 11, 2010. On October 12, 2010, the sale of our South Africa canning operations was executed for $8.4 million and was collected by January 27, 2011.

The following is a tabular presentation of the non-recurring fair value measurement along with the level within the fair value hierarchy in which the fair value measurement in its entirety falls (U.S. dollars in millions):

	2011 Fair Value Measurements
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Central American melon assets	$	2.8	$	-	$	-	$	2.8
United Kingdom contract termination		0.7						0.7
	$	3.5	$	-	$	-	$	3.5

	2010 Fair Value Measurements
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investment in South Africa subsidiary	$	7.8	$	-	$	7.8	$	-
DEL MONTE® U.K. Beverage Trademark		5.1		-		-		5.1
	$	12.9	$	-	$	7.8	$	5.1

FRESH DEL MONTE PRODUCE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited)

18. Shareholders’ Equity

Our shareholders have authorized 50,000,000 preferred shares at $0.01 par value of which none has been issued or is outstanding. Our shareholders have authorized 200,000,000 ordinary shares of common stock of which 58,237,239 and 58,036,839 ordinary shares are issued and outstanding at September 30, 2011, respectively.

On July 31, 2009, our Board of Directors approved a three-year stock repurchase program of up to $150 million of our Ordinary Shares. On May 5, 2010, our Board of Directors approved an additional three-year stock repurchase program of up to $150 million of our ordinary shares.

The following represents a summary of repurchase activity during the quarter and nine months ended (U.S. dollars in millions, except share and per share data):

	Summary of Repurchases
	September 30, 2011						October 1, 2010
	Shares		USD		Average price per share		Shares		USD		Average price per share

Quarter ended:		1,836,696	$	42.6	$	23.18		1,353,621	$	29.1	$	21.53

Nine months ended:		1,836,696		42.6		23.18		3,720,300		78.8		21.19

We repurchased 6,895,355 ordinary shares, for an aggregate purchase price of $150.7 million under the aforementioned $300 million repurchase program. We have retired 6,694,955 of the 6,895,355 ordinary shares. We have a maximum dollar value of $149.3 million of shares that may yet be purchased under the stock repurchase program. As of September 30, 2011, we had $4.7 million in accounts payable and accrued expenses related to 200,400 shares repurchased that were not paid, total cash proceeds on repurchases for the nine months ended were $37.9 million. Refer to Consolidated Statements of Cash Flows for stock repurchases in the period.

Subsequent to September 30, 2011, we continued to purchase ordinary shares as part of the three-year stock repurchase program. During the period from October 1, 2011 through the filing date, we repurchased 281,082 ordinary shares in open market transactions at an average price of $22.96. All of the ordinary shares that have been repurchased to date have been retired as October 21, 2011.

On March 3, 2011, our Board of Directors declared an interim cash dividend of $0.05 per ordinary share to shareholders of record on March 16, 2011. At the Annual General Meeting of Shareholders held on May 4, 2011, the shareholders approved a cash dividend previously declared by the Board of Directors for the year ended December 31, 2010, of $0.05 per ordinary share, payable on June 10, 2011, to shareholders of record on May 18, 2011. On August 3, 2011, our Board of directors increased the interim cash dividend from $0.05 to $0.10 per ordinary share. We paid $6.0 million and $11.9 million in dividends during the quarter and nine months ended September 30, 2011, respectively.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are one of the world’s leading vertically integrated producers, marketers and distributors of high-quality fresh and fresh-cut fruit and vegetables, as well as a leading producer and marketer of prepared fruit and vegetables, juices, beverages and snacks in Europe, Africa, the Middle East and countries formerly part of the Soviet Union. We market our products worldwide under the DEL MONTE® brand, a symbol of product innovation, quality, freshness and reliability since 1892. Our global sourcing and logistics system allows us to provide regular delivery of consistently high-quality produce and value-added services to our customers. Our major producing operations are located in North, Central and South America, Asia and Africa. Production operations are aggregated on the basis of our products: bananas, other fresh produce and prepared foods. Other fresh produce includes pineapples, melons, tomatoes, non-tropical fruit (including grapes, apples, pears, peaches, plums, nectarines, avocados, citrus and kiwis), fresh-cut produce, other fruit and vegetables and a plastic product and box manufacturing business, a grain business (which we exited in 2010) and third-party ocean freight services (which we significantly curtailed in 2009). Prepared foods include prepared fruit and vegetables, juices, beverages, snacks, poultry and meat products.

Liquidity and Capital Resources

Net cash provided by operating activities was $248.8 million for the first nine months of 2011 as compared with $239.8 million for the first nine months of 2010, an increase of $9.0 million. The increase in cash provided by operating activities was principally attributable to higher net income, partially offset by changes in operating assets and liabilities, principally a lower decrease in inventories during the first nine months of 2011 as compared with the same period in 2010.

Working capital was $420.8 million at September 30, 2011 compared with working capital of $513.8 million at December 31, 2010. The decrease in working capital of $93.0 million was primarily attributable to lower cash and cash equivalents, accounts receivables, inventories and higher accounts payable and accrued expenses, partially offset by higher income taxes and other taxes payable. Accounts receivables and inventories are lower as compared with year-end 2010 due to seasonal variations and lower quantities of finished products in-transit to markets and income and other taxes payable increased due to higher earnings in certain taxable jurisdictions.

Net cash used in investing activities for the first nine months of 2011 was $58.8 million compared with $31.3 million for the first nine months of 2010. Net cash used in investing activities for the first nine months of 2011 consisted of capital expenditures of $62.7 million, partially offset by proceeds from sales of property, plant and equipment of $3.9 million. Capital expenditures for the first nine months of 2011 were primarily for improvements and expansion of production facilities in Jordan, Kenya and Greece related to the prepared food segment and Costa Rica, Guatemala and the Middle East related to the other fresh produce segment. Capital expenditures for the first nine months of 2011 also included improvements of distribution facilities in North America and production facilities in Guatemala principally related to the banana segment. Proceeds from sales of property, plant and equipment for the first nine months of 2011 consisted primarily of the sale of surplus shipping-related equipment.

Net cash used in investing activities for the first nine months of 2010 consisted of capital expenditures of $48.0 million, partially offset by proceeds from sales of property, plant and equipment of $12.5 million and the return of capital by one of our Costa Rica subsidiaries of $4.2 million. Capital expenditures for the first nine 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 nine months of 2010 consisted primarily of the sale of four refrigerated vessels and a distribution center in Brazil.

Net cash used in financing activities for the first nine months of 2011 was $214.5 million compared with $198.1 million for the first nine months of 2010. Net cash used in financing activities for the first nine months of 2011 consisted of net repayments on long-term debt of $183.4 million, distributions to noncontrolling interests of $3.1 million, $11.9 million of dividends paid and repurchase of our ordinary shares of $37.9 million, partially offset by proceeds from stock options exercised of $21.8 million.

Net cash used in financing activities for the first nine months of 2010 consisted of net repayments on long-term debt of $123.5 million and repurchases of our ordinary shares of $78.8 million, partially offset by contributions from noncontrolling interests of $3.4 million and proceeds from stock options exercised of $0.8 million.

We finance our working capital and other liquidity requirements primarily through cash from operations and borrowings under our senior secured revolving credit facility (the “Credit Facility”) administered by Rabobank Nederland, New York Branch. Effective August 8, 2011, we voluntarily lowered the borrowing capacity on the Credit Facility from $500.0 million to $300.0 million in order to reduce our unused commitment fees. As a result of the voluntary reduction of our borrowing capacity, we proportionately reduced capitalized debt issuance costs by $1.2 million. This write-off is included as additional interest expense in our accompanying Consolidated Statement of Income. The Credit Facility has a 3.5-year term, with a scheduled termination date of January 17, 2013. The Credit Facility includes a swing line facility and a letter of credit facility with a $100.0 million sublimit. Borrowings under the Credit Facility bear interest at a spread over the London Interbank Offer Rate (“LIBOR”) that varies with our leverage ratio. On March 28, 2011, we amended the Credit Facility by lowering the applicable margins over LIBOR or Base rate borrowings that vary with our leverage ratio. The Credit Facility is collateralized directly or indirectly by substantially all of our assets and is guaranteed by certain of our subsidiaries. At September 30, 2011, we had $104.7 million outstanding under the Credit Facility bearing interest at a per annum rate of 1.74%. In addition, we pay a fee on unused commitments.

At September 30, 2011, we had $198.5 million available under committed working capital facilities, primarily under the Credit Facility. At September 30, 2011, we applied $15.4 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 $8.9 million in other letters of credit and bank guarantees not included in the letter of credit facility.

As of September 30, 2011, we had $113.4 million of long-term debt and capital lease obligations, including the current portion, consisting of $104.7 million outstanding under the Credit Facility, $1.8 million of capital lease obligations and $6.9 million of other long-term debt and notes payable.

Based on our operating plan, combined with our borrowing capacity under our Credit Facility, we believe we will have sufficient resources to meet our cash obligations in the foreseeable future.

As of September 30, 2011, we had cash and cash equivalents of $26.8 million.

As a result of abandoning isolated areas in the Philippines banana operations due to plant disease, melon program rationalization in Costa Rica and Guatemala and the closure of distribution centers in the United Kingdom, we paid approximately $0.3 million in termination benefits and $2.2 million in contractual obligations during the first nine months of 2011. We expect to make additional payments of approximately $3.1 million principally related to the previously announced closure of our Hawaii pineapple operations and the closure of facilities in the United Kingdom. In addition, we expect to pay approximately $3.8 million in the next 12 months as a result of an unfavorable outcome to litigation regarding a tax position in a foreign jurisdiction. These cash outlays will be funded from operating cash flows and available borrowings under credit facilities.

The fair value of our derivatives changed from a net liability of $18.6 million as of December 31, 2010, to a net liability of $4.3 million as of September 30, 2011 related to our foreign currency cash flow hedges. The decrease in the net liability related primarily to the stronger U.S. dollar relative to the euro and British pound offset by the weaker U.S. dollar relative to the Japanese yen being hedged when compared to the contracted exchange rates. We expect that $3.3 million in net liabilities outstanding will be transferred to earnings during the next 12 months and $1.0 million in 2012, along with the earnings effect of the related forecasted transaction for each year.

Results of Operations

The following tables present for each of the periods indicated (i) net sales by geographic region and (ii) net sales and gross profit by product category, and in each case, the percentage of the total represented thereby (U.S. dollars in millions, except percent data):

As a result of our decision to exit grain operations during 2010 and the elimination of third-party ocean freight services from Northern Europe to the Caribbean during 2009 and the relative size of the remaining operations, we have combined the other products and services segment with the other fresh produce segment in 2011. Prior year amounts have been reclassified to conform to the 2011 presentation.

Net sales by geographic region:

	Quarter ended								Nine months ended
	September 30, 2011				October 1, 2010				September 30, 2011				October 1, 2010
North America	$	399.9	50	%	$	380.5	48	%	$	1,430.6	51	%	$	1,355.4	49	%
Europe		174.7	22	%		198.1	25	%		666.8	24	%		703.6	26	%
Asia		93.6	12	%		93.6	12	%		341.2	12	%		319.1	12	%
Middle East		114.2	14	%		108.6	14	%		324.3	11	%		308.2	11	%
Other		12.8	2	%		12.3	1	%		46.0	2	%		49.9	2	%
Total	$	795.2	100	%	$	793.1	100	%	$	2,808.9	100	%	$	2,736.2	100	%

Product net sales and gross profit:

	Quarter ended
	September 30, 2011									October 1, 2010
	Net Sales				Gross Profit (Loss)					Net Sales				Gross Profit (Loss)
Banana	$	375.1	47	%	$	(1.0	)	-2	%	$	370.1	47	%	$	(6.7	)	-13	%
Other fresh produce		337.0	42	%		52.1		83	%		329.4	41	%		45.2		87	%
Prepared food		83.1	11	%		11.8		19	%		93.6	12	%		13.5		26	%
Total	$	795.2	100	%	$	62.9		100	%	$	793.1	100	%	$	52.0		100	%

	Nine months ended
	September 30, 2011								October 1, 2010
	Net Sales				Gross Profit				Net Sales				Gross Profit
Banana	$	1,268.7	45	%	$	91.3	32	%	$	1,225.0	45	%	$	42.2	18	%
Other fresh produce		1,266.1	45	%		151.7	52	%		1,244.9	45	%		153.5	66	%
Prepared food		274.1	10	%		45.6	16	%		266.3	10	%		37.1	16	%
Total	$	2,808.9	100	%	$	288.6	100	%	$	2,736.2	100	%	$	232.8	100	%

Third Quarter 2011 Compared with Third Quarter 2010

Net Sales. Net sales for the third quarter of 2011 were $795.2 million compared with $793.1 million for the third quarter of 2010. The increase in net sales of $2.1 million was attributable to higher net sales of other fresh produce and bananas, partially offset by lower net sales of prepared food.

·	Net sales in the other fresh produce segment increased $7.6 million principally as a result of higher net sales of fresh-cut products and pineapples, partially offset by lower net sales of tomatoes, Argentine grain and melons.

o	Net sales of fresh-cut products increased primarily due to increased sales of higher priced products combined with an expanded customer base.

Net sales of pineapples increased principally as a result of higher sales volume in North America, the Middle East and Asia, partially offset by lower sales volume in Europe. Per unit sales prices were higher in Europe and North America due to favorable market conditions and exchange rates and lower in the Middle East and Asia due to increases in sales volumes. Worldwide sales volume increased 4% and per unit sales prices increased 5% principally due to favorable market and growing conditions.

o	Net sales of tomatoes decreased principally due to lower customer demand and program rationalization.

o	Net sales of Argentine grain decreased as a result of our decision in 2010 to exit grain operations in Argentina.

o	Net sales of melons decreased principally as a result of lower sales volume in North America due to the rationalization of melon operations, partially offset by higher per unit sales prices.

Net sales of bananas increased by $5.0 million principally due to higher per unit sales prices in North America and higher sales volumes in the Middle East, partially offset by lower sales volume and per unit sales prices in Europe and lower per unit sales prices in Asia. Worldwide banana per unit sales prices decreased 4% and sales volume increased by 6%.

o	North America banana net sales increased principally as a result of higher per unit sales prices due to industry shortages.

o	Middle East banana net sales increased due to higher sales volume, partially offset by lower per unit sales prices.

o	Europe banana net sales decreased as a result of lower sales volumes and lower per unit sales prices that resulted from unfavorable market conditions.

o	Asia banana net sales decreased principally due to lower demand.

Net sales in the prepared food segment decreased $10.5 million principally due to lower net sales of canned pineapple and deciduous products in Europe as a result of reduced production volumes of pineapple due to the residual effect of a drought earlier in the year in our sourcing operation and planned volume reduction of deciduous products. Partially offsetting these decreases in net sales were higher net sales in our Jordanian poultry and processed meat business that resulted from improved selling prices and an expanded customer base.

Cost of Products Sold. Cost of products sold was $732.3 million for the third quarter of 2011 compared with $741.1 million for the third quarter of 2010, a decrease of $8.8 million. This decrease in cost of products sold was primarily attributable to lower fruit cost that resulted from favorable growing conditions, partially offset by higher fuel costs.

Gross Profit. Gross profit was $62.9 million for the third quarter of 2011 compared with $52.0 million for the third quarter of 2010, an increase of $10.9 million. The increase in gross profit was primarily attributable to higher gross profit on other fresh produce and bananas, partially offset by lower gross profit on prepared food.

·	Gross profit in the other fresh produce segment increased $6.9 million principally due to higher gross profit on pineapples partially offset by lower gross profit on fresh-cut products.

Gross profit on pineapples increased principally due to higher per unit sales prices in North America and Europe primarily the result of favorable market conditions combined with lower fruit cost that resulted from favorable growing conditions, partially offset by higher fuel costs. Worldwide per unit sales prices increased 5% and per unit cost decreased 2%.

o	Gross profit on fresh-cut products decreased principally due to higher fruit costs that resulted from higher input costs, partially offset by higher per unit sales prices and sales volumes.

Gross profit in the banana segment increased $5.7 million primarily due to higher per unit sales prices in North America as a resulted of industry shortages and improved market conditions, partially offset by higher fuel costs and lower sales volume and per unit sales prices in Europe. Also contributing to the increase in gross profit during the third quarter of 2011 was lower fruit cost that resulted from favorable growing conditions.

Gross profit in the prepared food segment decreased by $1.7 million principally as a result of lower gross profit on canned pineapples due to lower yields as a result of drought conditions and higher ocean freight costs. Also contributing to the decrease in gross profit was higher production cost in our Jordanian poultry business as a result of lower yields, partially offset by higher per unit sales price.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $6.2 million from $40.9 million in the third quarter of 2010 to $47.1 million for the third quarter of 2011. The increase was principally due to higher compensation and advertising and promotional expense.

Gain on Sales of Property, Plant and Equipment. The gain on sales of property, plant and equipment of $1.8 million during the third quarter of 2011 was principally due to the sale of shipping-related equipment. The gain on sales of property, plant and equipment of $4.5 million during the third quarter of 2010 was principally related to the sale of a distribution center in Brazil and the sale of a refrigerated vessel and other shipping-related equipment.

Asset Impairment and Other Charges, Net. Asset impairment and other charges, net were $0.6 million during the third quarter of 2011 as compared with $0.1 million during the third quarter of 2010. During the third quarter of 2011, we recorded $1.3 million in asset impairments and contract termination charges due to the closure of a leased distribution center in the United Kingdom related to the banana segment and a reversal of accrued legal expenses of $0.7 million in Hawaii related to the other fresh produce segment.

During the third quarter of 2010, we recorded a $1.4 million impairment charge of the DEL MONTE® perpetual, royalty-free brand name license due to lower than expected sales volume and pricing in the United Kingdom related to beverage products in the prepared food segment. We also incurred a $0.7 million impairment charge as a result of the relocation of a port facility in North America related to the banana segment, an additional $0.3 million in impairments and received $2.4 million in insurance reimbursements related to flood damage to our Guatemala banana farms and recorded $0.1 million in termination benefits in South Africa related to the prepared food segment.

Operating Income. Operating income for the third quarter of 2011 increased by $1.5 million from $15.5 million in the third quarter of 2010 to $17.0 million for the third quarter of 2011. The increase in operating income was due to higher gross profit, partially offset by higher selling, general and administrative expenses, lower gain on sales of property, plant and equipment and higher asset impairment and other charges.

Interest Expense. Interest expense was $2.1 million for the third quarter of 2011 as compared with $2.2 million for the third quarter of 2010, a decrease of $0.1 million. This decrease was principally due to lower interest rates and average debt balances partially offset by a $1.2 million write-off of debt issuance costs as a result of our voluntary reduction of available borrowing capacity under our Credit Facility.

Other Expense(Income), Net. Other expense, net was $0.4 million for the third quarter of 2011 as compared with other income of $3.0 million for the third quarter of 2010. The decrease in other expense (income) of $3.4 million was principally attributable to foreign exchange losses during the third quarter of 2011 as compared with foreign exchange gains during the third quarter of 2010.

Provision for Income Taxes. Provision for income taxes was $2.0 million for the third quarter of 2011 as compared with $3.2 million for the third quarter of 2010.

First Nine Months of 2011 Compared with First Nine Months of 2010

Net Sales. Net sales for the first nine months of 2011 were $2,808.9 million compared with $2,736.2 million for the first nine months of 2010. The increase in net sales of $72.7 million was attributable to higher net sales in all of our segments.

Net sales of bananas increased by $43.7 million principally due to higher sales volume and per unit sales prices in North America and higher per unit sales prices in Asia, partially offset by lower sales volume in Europe and the Middle East. Worldwide banana per unit sales prices increased 4% and sales volume was relatively flat as compared with the prior year.

o	North America banana net sales increased principally as a result of higher per unit sales prices due to industry shortages.

o	Asia banana net sales increased principally due to higher per unit sales prices as a result of improved market conditions and favorable exchange rates.

o	Europe banana net sales decreased primarily as a result of lower sales volumes earlier in the year, partially offset by higher per unit sales prices and favorable exchange rates.

o	Middle East banana net sales decreased principally due to lower sales volume and lower per unit sales prices.

·	Net sales in the other fresh produce segment increased $21.2 million principally as a result of higher net sales of non-tropical fruit, fresh-cut products and pineapples, partially offset by lower net sales of melons, strawberries and Argentine grain.

Net sales of non-tropical fruit increased principally due to significantly higher per unit sales prices of avocados in North America as a result of increased demand, combined with higher sales volume of grapes in Asia and North America and higher per unit sales prices of grapes in the Middle East, partially offset by lower per unit selling prices of grapes in North America.

o	Net sales of fresh-cut products increased primarily due to higher per unit sales prices and sales volume in North America, Europe and the Middle East that resulted from improved market conditions and an expanded customer base.

o	Net sales of pineapples increased principally as a result of higher sales volume in Asia, the Middle East and North America principally due to favorable growing conditions in Asia, partially offset by lower sales volume in Europe and lower per unit sales prices in Asia and the Middle East.

o	Net sales of melons decreased principally as a result of planned sales volume reductions.

o	Net sales of strawberries decreased due to lower customer demand in North America.

o	Net sales of Argentine grain decreased as a result of our decision in 2010 to exit grain operations in Argentina.

Net sales in the prepared food segment increased $7.8 million principally due to higher net sales in our Jordanian poultry and processed meat business that resulted from improved selling prices and an expanded customer base combined with higher net sales of pineapple industrial products in Europe and beverage products in Africa and the Middle East. Partially offsetting these increases were lower net sales of canned deciduous and pineapple products as a result of reduced deciduous sourcing from South Africa and lower yields in our Kenya pineapple operations as a result of drought conditions earlier in the year.

Cost of Products Sold. Cost of products sold was $2,520.3 million for the first nine months of 2011compared with $2,503.4 million for the first nine months of 2010, an increase of $16.9 million. This increase in cost of products sold was primarily attributable to higher fruit cost for all segments with the exception of bananas as a result of higher input costs combined with higher fuel cost and unfavorable exchange rates in producing countries. Partially offsetting these increases in cost of product sold was a reduction of other charges associated with exit activities, floods and an earthquake. During the first nine months of 2010, we incurred $8.3 million in other charges principally related to exit activities in Brazil, the write-off of inventory as a result of damage caused by floods in our Guatemala banana farms and by an earthquake in our Chile non-tropical fruit operations.

Gross Profit. Gross profit was $288.6 million for the first nine months of 2011 compared with $232.8 million for the first nine months of 2010, an increase of $55.8 million. The increase in gross profit was primarily attributable to higher gross profit on bananas and prepared food, partially offset by lower gross profit on other fresh produce.

Gross profit in the banana segment increased $49.1 million primarily due to higher per unit sales prices in North America and Asia that resulted from industry shortages and improving market conditions combined with lower fruit cost due to favorable growing conditions, partially offset by higher fuel costs and lower sales volume in Europe.

Gross profit in the prepared food segment increased by $8.5 million principally as a result of lower costs of canned deciduous products as a result of operational improvements made during 2010, combined with increases in per unit sales prices of pineapple products and beverage products that resulted from improved market conditions. These increases in gross profit were partially offset by higher costs in the Jordanian poultry business, primarily the cost of corn feed and higher fruit cost in our Kenya canned pineapple operations principally due to unfavorable growing conditions.

·	Gross profit in the other fresh produce segment decreased $1.8 million principally due to lower gross profit on non-tropical fruit and tomatoes, partially offset by higher gross profit on pineapples and melons.

Gross profit on non-tropical fruit decreased principally due to lower selling prices of grapes in North America and Asia and higher costs of grapes in North America as a result of increased fruit procurement and fuel costs. Also contributing to the decrease in gross profit was lower per unit selling prices of stonefruit in North America and Europe. Partially offsetting these decreases in gross profit on non-tropical fruit were higher per unit selling prices for grapes in the Middle East due to reduced supplies in the region combined with higher gross profit on apples resulting from increased sales volumes in South America.

o	Gross profit on tomatoes decreased principally due to higher procurement and freight costs.

o	Gross profit on pineapples increased principally due to higher sales volumes in North America, the Middle East and Asia as a result of favorable growing conditions partially offset by lower selling prices in the Middle East and higher fuel costs.

o	Gross profit on melons increased due to the rationalization of the melon program that commenced in 2010.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $15.7 million from $125.9 million for the first nine months of 2010 to $141.6 million for the first nine months of 2011. The increase was principally due to higher compensation expense combined with higher selling and marketing expenses in Europe.

Gain on Sales of Property, Plant and Equipment. The gain on sales of property, plant and equipment was $2.6 million during the first nine months of 2011 as compared with $7.9 million during the first nine months of 2010. During the first nine months of 2011 gain on sales of property, plant and equipment consisted primarily of sales of shipping-related and other surplus equipment and during the first nine months of 2010 it consisted primarily of the sale of one refrigerated vessel and other shipping-related equipment as well as a distribution center in Brazil.

Asset Impairment and Other Charges, Net. Asset impairment and other charges, net were $12.8 million during the first nine months of 2011 as compared with $24.1 million during the first nine months of 2010.

During the first nine months of 2011 we recorded the following asset impairments and other charges related to the banana and other fresh produce segments:

·	$1.3 million in asset impairments and contract termination charges due to the closure of a leased distribution center in the United Kingdom;

·	$4.9 million in asset impairments and contract termination charges and a $3.3 million goodwill impairment charge as a result of our Central America melon program rationalization;

·	$1.3 million in contract termination and severance charges related to our decision to abandon an isolated area in our banana operations in the Philippines;

·	$1.0 million in other charges and legal costs related to Hawaii;

·	$0.8 million related to the write-off of an abandoned banana producing area in Costa Rica due to low productivity; and

·	$0.2 million in other impairments charges.

During the first nine months of 2010, we recorded the following asset impairments and other charges:

·	As a result of entering into an agreement to sell substantially all of the assets of our South Africa canning operations, we recognized a $16.7 million asset impairment of our investment in South Africa and other charges related to the prepared food segment;

·	A $1.4 million impairment charge of the DEL MONTE® perpetual, royalty-free brand name license in the United Kingdom due to lower than expected sales volume and pricing for beverage products in the prepared food segment;

·	A $0.7 million impairment charge as a result of the relocation of a port facility in North America related to the banana segment and other fresh produce segment;

·	$6.0 million in impairment charges and received $2.4 million in insurance reimbursements related to flood damage to our Guatemala banana farms;

·	$1.1 million in asset impairments and other charges due to the discontinuation of melon growing operations in Brazil related to the other fresh produce segment;

·	$1.0 million in impairment charges related to damages caused by an earthquake in Chile in the other fresh produce segment; and

·	$0.4 million of insurance recoveries related to the 2008 flood damage to our Brazil banana plantations.

Operating Income. Operating income for the first nine months of 2011 increased by $46.1 million from $90.7 million in the first nine months of 2010 to $136.8 million for the first nine months of 2011. The increase in operating income was due to higher gross profit, lower asset impairment and other charges, partially offset by higher selling, general and administrative expenses and lower gain on sales of property, plant and equipment.

Interest Expense. Interest expense decreased by $2.8 million from $8.6 million for the first nine months of 2010 to $5.8 million for the first nine months of 2011, principally due to lower interest rates and average debt balances, partially offset by a $1.2 million write-off of debt issuance costs as a result of our voluntary reduction of available borrowing capacity under our Credit Facility.

Other Expense, Net. Other expense, net was $3.8 million for the first nine months of 2011 as compared with $6.6 million for the first nine months of 2010, a decrease of $2.8 million. The decrease in other expense is primarily attributable to lower foreign exchange losses.

Provision for Income Taxes. Provision for income taxes was $22.3 million for the first nine months of 2011 as compared with $4.7 million for the first nine months of 2010. The increase in the tax provision is due to higher earnings in certain taxable jurisdictions combined with an accrual of $4.2 million for an uncertain tax position in a foreign jurisdiction. In addition, the provision for income taxes for the first nine months of 2010 included a benefit of $7.3 million as a result of a change in estimate.

Fair Value Measurements

During the second quarter of 2011, we recognized $7.7 million in impairment charges related to a second quarter decision to discontinue planting certain melon varieties in Central America as part of the ongoing melon rationalization program. The carrying value of these assets was $10.5 million including $7.2 million in property, plant and equipment consisting primarily of buildings and machinery and equipment and $3.3 million of melon goodwill. Property, plant and equipment was written down to a fair value of $2.8 million. We estimated the fair value of these assets using the income based approach considering the cash flows that would be obtained as a result of the production and distribution of melons in areas of continued production. The income based approach utilizes unobservable inputs. Due to the use of unobservable inputs, we classify the fair value of these growing areas within Level 3 of the fair value hierarchy.

We assess goodwill for impairment on an annual basis on the first day of the fourth quarter of each year, or sooner if events indicate such a review is necessary. As a result of the decision to discontinue planting certain melon varieties, which significantly reduced melon volumes in the future, we estimated an implied fair value of the melon reporting unit’s goodwill by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill (including any unrecognized intangible assets). This exercise yielded a write-off of the melon goodwill of $3.3 million. As of September 30, 2011, we were not aware of any other items or events that would cause us to further adjust the recorded value of goodwill for impairment.

Potential impairment exists if the fair value of a reporting unit to which goodwill has been allocated is less than the carrying value of the reporting unit. The amount of the impairment to recognize, if any, is calculated as the amount by which the carrying value of goodwill exceeds its implied value. Future changes in the estimates used to conduct the impairment review, including revenue projection, market values and changes in the discount rate used, could cause the analysis to indicate that our goodwill is impaired in subsequent periods and result in a write-off of a portion or all of goodwill. The discount rate used is based on independently calculated risks, our capital mix and an estimated market risk premium. The fair value of the prepared food reporting unit’s goodwill is highly sensitive to differences between estimated and actual cash flows and changes in the related discount rate used to evaluate the fair value of this asset. If we are unable to recover from current challenging economic conditions in Europe, the prepared food reporting unit goodwill may be at risk for impairment in the future. We disclosed the sensitivities related to the prepared food reporting unit’s goodwill in our annual financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2010.

Seasonality

Interim results are subject to significant variations and may not be indicative of the results of operations that may be expected for the entire 2011 fiscal year. See the information under the caption “Seasonality” provided in Item 1. Business, of our annual report on Form 10-K for the year ended December 31, 2010.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our annual report on Form 10-K for the year ended December 31, 2010.

Item 4.

Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2011. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. Such officers also confirm that there was no change in our internal control over financial reporting during the quarter ended September 30, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

See Note 12, “Commitments and Contingencies”, to the Consolidated Financial Statements, Part I, Item 1 included herein.

Item 1A.

Risk Factors

There have been no material changes in the risk factors from the information provided in Item 1A. Risk Factors of our annual report on Form 10-K for the year ended December 31, 2010.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding our purchases of ordinary shares during the periods indicated:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program (1)(2)
July 2, 2011 through July 31, 2011		-	$	-		-	$	191,965,965
August 1, 2011 through August 31, 2011		697,496	$	22.76		697,496	$	176,090,956
September 1, 2011 through September 30, 2011		1,139,200	$	23.44		1,139,200	$	149,388,108
Total		1,836,696	$	23.18		1,836,696	$	149,388,108

(1)	As of September 30, 2011, we retired 1,636,296 of the repurchased ordinary shares and had 200,400 treasury shares. The remaining 200,400 shares were retired prior to the issuance of the Consolidated Financial Statements included in Part I.

(2)	On August 3, 2009, we announced that our Board of Directors, at their July 31, 2009 board meeting, approved a three-year stock repurchase program of up to $150.0 million of our ordinary shares.

(3)	On May 5, 2010, we announced that our Board of Directors, at their May 5, 2010 board meeting, approved a three-year stock repurchase program of up to $150.0 million of our ordinary shares in addition to the program announced on August 3, 2009.

Item 6.

Exhibits

31.1*	Certification of Chief Executive Officer filed pursuant to 17 CFR 240.13a-14(a).

31.2*	Certification of Chief Financial Officer filed pursuant to 17 CFR 240.13a-14(a).

32*	Certification of Chief Executive Officer and Chief Financial Officer furnished pursuant to 17 CFR 240.13a-14(b) and 18 U.S.C. Section 1350.

101.INS**	XBRL Instance Document.

101.SCH**	XBRL Taxonomy Extension Schema Document.

101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.

101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.

*	Filed herewith

In accordance with Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Fresh Del Monte Produce Inc.

Date: November 1, 2011	By:	/s/ Hani El-Naffy
		Hani El-Naffy
		President & Chief Operating Officer

	By:	/s/ Richard Contreras
		Richard Contreras
		Senior Vice President & Chief Financial Officer