-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QkEgat9/Uk/DfQMn+Q4MwWdTcVs/fWrah54ge4M1+AX3gVe6Caj/ZmzUoo7hL9rC QUaGTaEwixeDGKcweIfWCg== /in/edgar/work/20000814/0000101063-00-000025/0000101063-00-000025.txt : 20000921 0000101063-00-000025.hdr.sgml : 20000921 ACCESSION NUMBER: 0000101063-00-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHIQUITA BRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0000101063 STANDARD INDUSTRIAL CLASSIFICATION: [0100 ] IRS NUMBER: 041923360 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01550 FILM NUMBER: 695481 BUSINESS ADDRESS: STREET 1: 250 E FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137848011 FORMER COMPANY: FORMER CONFORMED NAME: UNITED BRANDS CO DATE OF NAME CHANGE: 19900403 10-Q 1 0001.txt - ------------------------------------------------------------------------ FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended Commission File June 30, 2000 Number 1-1550 CHIQUITA BRANDS INTERNATIONAL, INC. Incorporated under the IRS Employer I.D. Laws of New Jersey No. 04-1923360 250 East Fifth Street, Cincinnati, Ohio 45202 (513) 784-8000 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of July 31, 2000, there were 66,557,712 shares of Common Stock outstanding. Page 1 of 12 Pages - ------------------------------------------------------------------------ CHIQUITA BRANDS INTERNATIONAL, INC. ---------------------------------- TABLE OF CONTENTS ---------------- Page ---- PART I - Financial Information - ------ Item 1 - Financial Statements
Consolidated Statement of Income for the quarters and six months ended June 30, 2000 and 1999 3 Consolidated Balance Sheet as of June 30, 2000, December 31, 1999 and June 30, 1999 4 Consolidated Statement of Cash Flow for the six months ended June 30, 2000 and 1999 5 Notes to Consolidated Financial Statements 6 Item 2 - Management's Analysis of Operations and Financial Condition 9 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 10 PART II - Other Information - ------- Item 4 - Submission of Matters to a Vote of Security Holders 11 Item 6 - Exhibits and Reports on Form 8-K 11 Signature 12
Part I - Financial Information - ------------------------------ Item 1 - Financial Statements - ----------------------------- CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- CONSOLIDATED STATEMENT OF INCOME (Unaudited) ------------------------------------------- (In thousands, except per share amounts)
Quarter Ended June 30, Six Months Ended June 30, ---------------------- ------------------------- 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Net sales $ 601,465 $ 676,857 $1,259,518 $1,369,859 ---------- ---------- ---------- ---------- Operating expenses Cost of sales 462,283 536,049 960,288 1,050,824 Selling, general and administrative 72,133 82,204 141,833 160,942 Depreciation 23,004 22,433 45,564 44,698 ---------- ---------- ---------- ---------- 557,420 640,686 1,147,685 1,256,464 ---------- ---------- ---------- ---------- Operating income 44,045 36,171 111,833 113,395 Interest income 2,824 2,311 5,929 4,600 Interest expense (31,997) (26,951) (63,963) (53,644) Other income, net 50 93 113 181 ---------- ---------- ---------- ---------- Income before income taxes and extraordinary item 14,922 11,624 53,912 64,532 Income taxes (4,000) (4,300) (8,000) (8,500) ---------- ---------- ---------- ---------- Income before extraordinary item 10,922 7,324 45,912 56,032 Extraordinary gain from debt prepayment 1,832 -- 1,832 -- ---------- ---------- ---------- ---------- Net income $ 12,754 $ 7,324 $ 47,744 $ 56,032 ========== ========== ========== ========== Earnings per common share: Basic - Income before extraordinary item $ .10 $ . 05 $ .56 $ . 72 - Extraordinary item .03 -- .03 -- ---------- ---------- ---------- ---------- - Net income $ .13 $ .05 $ .59 $ .72 ========== ========== ========== ========== Diluted - Income before extraordinary item $ .10 $ . 05 $ .56 $ .69 - Extraordinary item .03 -- .02 -- ---------- ---------- ---------- ---------- - Net income $ .13 $ .05 $ .58 $ .69 ========== ========== ========== ========== Dividends per common share $ -- $ . 05 $ -- $ .10 ========== ========== ========== ==========
See Notes to Consolidated Financial Statements. 3 CHIQUITA BRANDS INTERNATIONAL, INC. ---------------------------------- CONSOLIDATED BALANCE SHEET (Unaudited) ------------------------------------- (In thousands, except share amounts)
June 30, December 31, June 30, 2000 1999 1999 ------------ ------------ ------------ ASSETS - ------ Current assets Cash and equivalents $ 94,413 $ 97,863 $ 180,362 Trade receivables (less allowances of $12,047, $12,214 and $10,924) 192,366 209,741 237,477 Other receivables, net 143,040 151,457 76,706 Inventories 340,196 421,806 343,651 Other current assets 36,842 22,000 32,655 ------------ ------------ ------------ Total current assets 806,857 902,867 870,851 Property, plant and equipment, net 1,115,982 1,177,823 1,155,662 Investments and other assets 353,593 333,257 383,492 Intangibles, net 169,116 182,180 187,348 ------------ ------------ ------------ Total assets $ 2,445,548 $ 2,596,127 $ 2,597,353 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities Notes and loans payable $ 35,756 $ 89,519 $ 56,861 Long-term debt due within one year 185,673 40,235 92,943 Accounts payable 199,338 217,327 223,220 Accrued liabilities 99,913 141,341 104,043 ------------ ------------ ------------ Total current liabilities 520,680 488,422 477,067 Long-term debt of parent company 772,086 883,815 883,548 Long-term debt of subsidiaries 260,597 343,186 222,446 Accrued pension and other employee benefits 58,518 68,162 84,424 Other liabilities 88,696 107,256 98,186 ------------ ------------ ------------ Total liabilities 1,700,577 1,890,841 1,765,671 ------------ ------------ ------------ Shareholders' equity Preferred and preference stock 253,475 253,475 253,475 Common stock, $.01 par value (66,532,262, 65,921,791 and 65,788,077 shares) 665 659 658 Capital surplus 765,582 761,079 759,632 Accumulated deficit (264,414) (303,607) (174,057) Accumulated other comprehensive loss (10,337) (6,320) (8,026) ------------ ------------ ------------ Total shareholders' equity 744,971 705,286 831,682 ------------ ------------ ------------ Total liabilities and shareholders' equity $ 2,445,548 $ 2,596,127 $ 2,597,353 ============ ============ ============
See Notes to Consolidated Financial Statements. 4 CHIQUITA BRANDS INTERNATIONAL, INC. ---------------------------------- CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited) ---------------------------------------------- (In thousands)
Six Months Ended June 30, --------------------------- 2000 1999 ----------- ----------- Cash provided (used) by: Operations Income before extraordinary item $ 45,912 $ 56,032 Depreciation and amortization 48,874 47,915 Changes in current assets and liabilities and other (9,353) (17,217) ----------- ----------- Cash flow from operations 85,433 86,730 ----------- ----------- Investing Capital expenditures (33,772) (74,475) Hurricane Mitch insurance proceeds 32,500 25,000 Proceeds from sale of business 16,228 -- Acquisitions of businesses -- (21,619) Refundable deposits for container equipment -- 9,673 Long-term investments (2,684) (8,142) Other 1,088 11,424 ----------- ----------- Cash flow from investing 13,360 (58,139) ----------- ----------- Financing Debt transactions Issances of long-term debt -- 194,623 Repayments of long-term debt (41,588) (42,330) Decrease in notes and loans payable (52,104) (74,363) Stock transactions Issuances of common stock -- 57 Dividends (8,551) (15,122) ----------- ----------- Cash flow from financing (102,243) 62,865 ----------- ----------- Increase (decrease) in cash and equivalents (3,450) 91,456 Balance at beginning of period 97,863 88,906 ----------- ----------- Balance at end of period $ 94,413 $ 180,362 =========== ===========
See Notes to Consolidated Financial Statements. 5 CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ------------------------------------------------------ Interim results are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full fiscal year. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair statement of the results of the interim periods shown have been made. See Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 for additional information relating to the Company's financial statements. Earnings Per Share - ------------------ Basic and diluted earnings per common share ("EPS") are calculated as follows (in thousands, except per share amounts):
Quarter Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2000 1999 2000 1999 --------- --------- --------- --------- Income before extraordinary item $ 10,922 $ 7,324 $ 45,912 $ 56,032 Extraordinary gain from debt prepayment 1,832 -- 1,832 -- --------- --------- --------- -------- Net income 12,754 7,324 47,744 56,032 Dividends on preferred and preference stock (4,275) (4,275) (8,551) (8,551) --------- --------- --------- -------- Net income attributed to common shares for basic EPS 8,479 3,049 39,193 47,481 Add back dividends on preferred and preference stock -- -- 8,551 8,551 --------- --------- --------- -------- Net income attributed to common shares for diluted EPS $ 8,479 $ 3,049 $ 47,744 $ 56,032 ========= ========= ========= ========= Weighted average common shares outstanding (shares used to calculate basic EPS) 66,486 65,761 66,376 65,690 Convertible preferred and preference stock -- -- 15,479 15,479 Stock options and other stock awards 11 137 62 176 --------- --------- --------- --------- Shares used to calculate diluted EPS 66,497 65,898 81,917 81,345 ========= ========= ========= ========= Earnings per common share: Basic - Before extraordinary item $ .10 $ . 05 $ .56 $ . 72 - Extraordinary item .03 -- .03 -- --------- --------- --------- --------- - Net income $ .13 $ .05 $ .59 $ .72 ========= ========= ========= ========= Diluted - Before extraordinary item $ .10 $ . 05 $ .56 $ .69 - Extraordinary item .03 -- .02 -- --------- --------- --------- --------- - Net income $ .13 $ .05 $ .58 $ .69 ========= ========= ========= =========
The assumed conversions to common stock of the Company's 7% convertible subordinated debentures, preferred stock and preference stock are excluded from the diluted EPS computations for periods in which these items, on an individual basis, have an anti-dilutive effect on diluted EPS. 6 Segment Information (in thousands) - --------------------------------- Financial information for the Company's business segments is as follows:
Quarter Ended Six Months Ended June 30, June 30, ------------------------ ----------------------- 2000 1999 2000 1999 ----------- ---------- ---------- ---------- Net sales Fresh Produce $ 487,160 $ 557,816 $1,011,723 $1,131,079 Processed Foods 114,305 119,041 247,795 238,780 ----------- ---------- ---------- ---------- $ 601,465 $ 676,857 $1,259,518 $1,369,859 =========== ========== ========== ========== Operating income Fresh Produce $ 37,130 $ 29,273 $ 99,917 $ 100,979 Processed Foods 6,915 6,898 11,916 12,416 ----------- ---------- ---------- ---------- $ 44,045 $ 36,171 $ 111,833 $ 113,395 =========== ========== ========== ========== Inventories (in thousands) - ------------------------- June 30, December 31, June 30, 2000 1999 1999 ------------ ------------ ------------ Fresh produce $ 31,467 $ 39,762 $ 36,480 Processed food products 144,456 215,365 131,972 Growing crops 98,721 104,699 110,406 Materials, supplies and other 65,552 61,980 64,793 ------------ ------------ ------------ $ 340,196 $ 421,806 $ 343,651 ============ ============ ============
Hedging - ------- Chiquita has a long-standing policy of periodically hedging transactions denominated in foreign currencies. At June 30, 2000, the Company had euro-denominated option contracts which ensure conversion of approximately euro 115 million of sales in 2000 at rates not lower than 0.92 dollars per euro or higher than 1.14 dollars per euro. The Company also had euro-denominated option contracts which ensure conversion of approximately euro 55 million of sales in 2000 at rates not lower than 0.92 dollars per euro and approximately euro 225 million of sales in 2001 at rates not lower than 0.91 dollars per euro. The carrying value of these option contracts at June 30, 2000 was approximately $8 million and their fair value based on quoted market prices was approximately $4 million. In addition, the Company realized a gain of $8 million on the early termination of certain option contracts. This gain has been deferred and will be recognized to income on the original maturity dates of the terminated option contracts. 7 Comprehensive Income - -------------------- Comprehensive income for all periods presented consisted solely of net income and unrealized foreign currency translation gains (losses), as follows (in thousands):
Quarter Ended Six Months Ended June 30, June 30, --------------------- ---------------------- 2000 1999 2000 1999 --------- ---------- ---------- ---------- Net income $ 12,754 $ 7,324 $ 47,744 $ 56,032 Unrealized foreign currency translation gains (losses) 584 (3,938) (4,017) (7,184) ---------- ---------- ---------- ---------- Comprehensive income $ 13,338 $ 3,386 $ 43,727 $ 48,848 ========== ========== ========== ==========
Acquisitions and Divestitures - ----------------------------- In April 1999, Chiquita Processed Foods, L.L.C., the Company's vegetable canning subsidiary, acquired certain canning assets in Oregon. The purchase price of approximately $20 million was funded with borrowings under Chiquita Processed Foods' revolving credit facility. The acquisition was accounted for as a purchase. In June 2000, the Company's Australian fresh produce subsidiary, Chiquita Brands South Pacific Limited, issued additional shares in conjunction with two business acquisitions. The Company's voting interest is now below 50% and, as a result, the investment in this business is accounted for under the equity method. Also in June 2000, the Company sold its California Day-Fresh Foods, Inc. juice business (marketing under the "Naked Foods" and "Ferraro's" brands) to North Castle Partners, L.L.C., a venture capital firm. Proceeds consisted of $16 million in cash and $9 million in short-term notes. 8 Item 2 - ------ CHIQUITA BRANDS INTERNATIONAL, INC. ---------------------------------- MANAGEMENT'S ANALYSIS OF ------------------------ OPERATIONS AND FINANCIAL CONDITION ---------------------------------- Operations - ---------- Operating income for the second quarter of 2000 was $44 million compared to 1999 second quarter operating income of $36 million. For the six months ended June 30, 2000, operating income was $112 million compared to $113 million in the first half of 1999. During the first half of 2000, the Company continued to achieve significant improvements in the production and logistics costs of its Fresh Produce business and to realize benefits from its workforce reduction program announced in late 1999. These improvements were offset by the combined impact of a significantly stronger dollar (mitigated in part by the Company's foreign currency hedging program), higher fuel costs, and lower banana volume in North America. Since June 30, 2000, the dollar has continued to strengthen compared to major European currencies. First half operating results for the Company's Processed Foods business segment were comparable to the prior year. Chiquita's second quarter 2000 operating income also includes charges and write-offs primarily relating to banana production assets, including the curtailment of Hurricane Mitch farm rehabilitation announced in June 2000. These charges were offset by a gain on the sale of California Day- Fresh Foods, Inc., a producer and distributor of natural fresh fruit and vegetable juices. Net interest expense increased in the first half of 2000 over the prior year as a result of higher average outstanding debt balances. The Company's effective tax rate is affected by the level and mix of income among various domestic and foreign jurisdictions in which the Company operates. Financial Condition - ------------------- Long-term debt due within one year increased $145 million from the end of 1999 primarily due to the reclassification from long-term debt of the Company's 7% subordinated debentures and a bank loan to certain of the Company's Costa Rican farm subsidiaries, both of which mature in the first quarter of 2001. The Company expects to repay these obligations with available cash and by obtaining additional financing. Additional financing to be obtained by the Company includes replacement of its $110 million parent company revolving credit facility, which expires in January 2001. The Company is in preliminary discussions with financial institutions regarding a new facility. The current parent company revolving credit facility has been used primarily for working capital purposes, with highest amounts typically drawn during the first half of the year. At March 31, 2000, the balance outstanding under this revolver was $42 million, its highest level in 2000. At July 31, 2000, no borrowings were outstanding under this facility. At July 31, 2000, approximately $65 million of additional borrowings were available to subsidiaries for working capital purposes under other committed lines of credit. Cash was unusually high at June 30, 1999 as a result of the Company's issuance late in June 1999 of its 10% Senior Notes due 2009. 9 During the first six months of 2000, capital expenditures of $34 million included approximately $14 million to rehabilitate farms in Honduras and Guatemala which were destroyed or damaged by Hurricane Mitch in late 1998. During the second quarter of 2000, the Company received an additional $32 million of insurance proceeds related to Hurricane Mitch. International - ------------- As previously described under "Management's Analysis of Operations and Financial Condition - European Union Regulatory Developments" in the Company's 1999 Annual Report to Shareholders, in early 1999 the United States Trade Representative ("USTR") imposed prohibitive retaliatory duties on selected European Union ("EU") products accounting for $191 million of annual exports to the United States. This trade retaliation was authorized by the World Trade Organization ("WTO") because of the EU's failure to bring its banana import regime into conformity with its international trade obligations. In May 2000, the President of the United States signed into law a measure which should increase pressure on the EU to make its banana regime WTO consistent. Referred to as "carousel retaliation," this measure requires the USTR to change the list of imported goods subject to retaliatory sanctions every six months. The USTR is currently finalizing a new list of EU products which will be subject to prohibitive duties. In July 2000, the European Commission declared that it had been unable to achieve consensus among the principal banana exporting nations on allocation of import licenses and will therefore be studying the feasibility of distributing licenses on a "first come, first served" basis. The Commission further said that if it is not able to devise a manageable "first come, first served" system by October 2000, it would propose elimination of the quota in favor of a "tariff only" regime that would impose a very substantial tariff on Latin American bananas while leaving bananas imported from the EU and its former colonies duty free. The United States and Latin American producing countries have informed the EU that they do not believe either of these proposals would be implemented in a WTO consistent manner. Uncertainties remain as to the outcome of this dispute and its effect on the Company and the banana industry as a whole. Item 3 - Quantitative and Qualitative Disclosures About Market Risk - ------------------------------------------------------------------- Reference is made to the discussion under "Management's Analysis of Operations and Financial Condition - Market Risk Management" in the Company's 1999 Annual Report to Shareholders. As of June 30, 2000, there were no material changes to the information presented. * * * * * This quarterly report contains certain information that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. This information is subject to a number of assumptions, risks and uncertainties, including product pricing, costs to purchase or grow (and availability of) fresh produce and other raw materials, currency exchange rate fluctuations, natural disasters and unusual weather conditions, operating efficiencies, labor relations, ability to obtain debt or equity financing when and as needed, actions of governmental bodies, and other market and competitive conditions, many of which are beyond the control of Chiquita. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking information. 10 Part II - Other Information - --------------------------- Item 4 - Submission of Matters to a Vote of Security Holders ------------------------------------------------------------ In connection with the election of directors of the Company, proxies were solicited pursuant to Regulation 14 under the Securities Exchange Act of 1934. One of the nominees for director, Jean Head Sisco, passed away in April 2000 and the board was reduced to six members. The following votes (representing approximately 90% of the shares eligible to vote) were cast at the Company's Annual Meeting of Shareholders held on May 10, 2000:
Votes -------------------------- Name For Withheld ----------------- ---------- --------- Carl H. Lindner 58,573,007 1,659,917 Keith E. Lindner 58,574,005 1,658,919 Fred J. Runk 58,683,012 1,549,912 William W. Verity 58,687,718 1,545,206 Oliver W. Waddell 58,671,717 1,561,207 Steven G. Warshaw 58,644,839 1,588,085
Item 6 - Exhibits and Reports on Form 8-K ----------------------------------------- (a) Exhibit 27 - Financial Data Schedule (b) There were no reports on Form 8-K filed by the Company during the quarter ended June 30, 2000. 11 SIGNATURE --------- 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. CHIQUITA BRANDS INTERNATIONAL, INC. By: /s/ William A. Tsacalis ------------------------------ William A. Tsacalis Vice President and Controller (Chief Accounting Officer) August 11, 2000 12 EX-27 2 0002.txt
5 This schedule contains summary financial information extracted from Chiquita Brands International, Inc. Form 10-Q for the six months ended June 30, 2000 and is qualified in its entirety by reference to such financial information. 1,000 6-MOS DEC-31-2000 JUN-30-2000 94,413 0 204,413 12,047 340,196 806,857 1,841,667 725,685 2,445,548 520,680 1,032,683 0 253,475 665 490,831 2,445,548 1,259,518 1,259,518 960,288 960,288 45,564 0 63,963 53,912 8,000 45,912 0 1,832 0 47,744 .59 .58
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