-----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, UTZK2vIzjtf8QfQ591equZIcPKNXyqowGl1X+lDA5TgkZJcvWQqjfqiln4Litqk9 0VUwUjMJnexCR2AtyqqfNw== /in/edgar/work/0000101063-00-000029/0000101063-00-000029.txt : 20001115 0000101063-00-000029.hdr.sgml : 20001115 ACCESSION NUMBER: 0000101063-00-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 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: 762923 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 September 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 October 31, 2000, there were 66,641,568 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 nine months ended September 30, 2000 and 1999 3 Consolidated Balance Sheet as of September 30, 2000, December 31, 1999 and September 30, 1999 4 Consolidated Statement of Cash Flow for the nine months ended September 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 11 PART II - Other Information - -------- 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 Nine Months Ended September 30, September 30, ------------------------ ------------------------ 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Net sales $ 465,773 $ 567,238 $ 1,725,291 $ 1,937,097 ----------- ---------- ----------- ----------- Operating expenses Cost of sales 408,771 483,922 1,369,059 1,534,746 Selling, general and administrative 58,230 81,328 200,063 242,270 Depreciation 22,558 22,294 68,122 66,992 ----------- ---------- ----------- ----------- 489,559 587,544 1,637,244 1,844,008 ----------- ---------- ----------- ----------- Operating income (loss) (23,786) (20,306) 88,047 93,089 Interest income 3,371 12,647 9,300 17,247 Interest expense (31,589) (29,079) (95,552) (82,723) Other income, net 52 84 165 265 ----------- ---------- ----------- ----------- Income (loss) before income taxes and extraordinary item (51,952) (36,654) 1,960 27,878 Income taxes -- -- (8,000) (8,500) ----------- ---------- ----------- ----------- Income (loss) before extraordinary item (51,952) (36,654) (6,040) 19,378 Extraordinary gain (loss)from debt extinguishment (1,761) -- 71 -- ----------- ---------- ----------- ----------- Net income (loss) $ (53,713) $ (36,654) $ (5,969) $ 19,378 =========== ========== =========== =========== Earnings per common share: Basic - Income (loss) before extraordinary item $ (.84) $ (.62) $ (.28) $ .10 - Extraordinary item (.03) -- .00 -- ----------- ---------- ----------- ----------- - Net income (loss) $ (.87) $ (.62) $ (.28) $ .10 =========== ========== =========== ========== Diluted- Income (loss) before extraordinary item $ (.84) $ (.62) $ (.28) $ .10 - Extraordinary item (.03) -- .00 -- ----------- ----------- ----------- ---------- - Net income (loss) $ (.87) $ (.62) $ (.28) $ .10 =========== =========== ========== ========== Dividends per common share $ -- $ .05 $ -- $ .15 =========== ========== ========== ==========
See Notes to Consolidated Financial Statements. 3 CHIQUITA BRANDS INTERNATIONAL, INC. ---------------------------------- CONSOLIDATED BALANCE SHEET (Unaudited) ------------------------------------- (In thousands, except share amounts)
September 30, December 31, September 30, 2000 1999 1999 ------------- ------------ ------------- ASSETS - ------ Current assets Cash and equivalents $ 109,965 $ 97,863 $ 132,947 Trade receivables (less allowances of $9,746, $12,214 and $11,878) 184,888 209,741 211,204 Other receivables, net 96,771 151,457 124,750 Inventories 442,527 421,806 438,157 Other current assets 27,100 22,000 25,766 ------------- ------------ ------------- Total current assets 861,251 902,867 932,824 Property, plant and equipment, net 1,102,078 1,177,823 1,174,168 Investments and other assets 342,054 333,257 358,433 Intangibles, net 167,060 182,180 187,209 ------------- ------------ ------------- Total assets $ 2,472,443 $ 2,596,127 $ 2,652,634 ============= ============ ============= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities Notes and loans payable $ 41,319 $ 89,519 $ 41,482 Long-term debt due within one year 180,360 40,235 37,085 Accounts payable 258,140 217,327 280,482 Accrued liabilities 105,165 141,341 114,745 ------------- ------------ ------------- Total current liabilities 584,984 488,422 473,794 Long-term debt of parent company 772,231 883,815 883,680 Long-term debt of subsidiaries 285,151 343,186 311,382 Other liabilities 145,905 175,418 192,716 ------------- ------------ ------------- Total liabilities 1,788,271 1,890,841 1,861,572 ------------- ------------ ------------- Shareholders' equity Preferred and preference stock 253,475 253,475 253,475 Common stock, $.01 par value (66,616,884, 65,921,791 and 65,842,074 shares) 666 659 658 Capital surplus 766,048 761,079 760,279 Accumulated deficit (322,402) (303,607) (218,278) Accumulated other comprehensive loss (13,615) (6,320) (5,072) ------------- ------------ ------------ Total shareholders' equity 684,172 705,286 791,062 ------------- ------------ ------------ Total liabilities and shareholders' equity $ 2,472,443 $ 2,596,127 $ 2,652,634 ============= ============ ============
See Notes to Consolidated Financial Statements. 4 CHIQUITA BRANDS INTERNATIONAL, INC. ---------------------------------- CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited) ----------------------------------------------- (In thousands)
Nine Months Ended September 30, ------------------------ 2000 1999 ----------- ---------- Cash provided (used) by: Operations Income (loss) before extraordinary item $ (6,040) $ 19,378 Depreciation and amortization 72,982 71,736 Collection of tax refund 21,685 -- Changes in current assets and liabilities and other (1,604) (10,439) ----------- ---------- Cash flow from operations 87,023 80,675 ----------- ---------- Investing Capital expenditures (46,127) (118,654) Hurricane Mitch insurance proceeds 32,500 25,000 Proceeds from sale of business 16,228 -- Proceeds from sales of property, plant and equipment 5,825 8,759 Acquisitions of businesses -- (21,619) Refundable deposits for container equipment -- 9,673 Long-term investments (3,133) (8,142) Other 335 3,647 ----------- ---------- Cash flow from investing 5,628 (101,336) ----------- --------- Financing Debt transactions Issuances of long-term debt 63,434 232,630 Repayments of long-term debt (84,616) (52,087) Decrease in notes and loans payable (46,541) (93,209) Stock transactions Issuances of common stock -- 57 Dividends (12,826) (22,689) ----------- --------- Cash flow from financing (80,549) 64,702 ----------- --------- Increase in cash and equivalents 12,102 44,041 Balance at beginning of period 97,863 88,906 ----------- ---------- Balance at end of period $ 109,965 $ 132,947 =========== ==========
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 Nine Months Ended September 30, September 30, ---------------------- ---------------------- 2000 1999 2000 1999 --------- ---------- --------- ---------- Income (loss) before extraordinary item $ (51,952) $ (36,654) $ (6,040) $ 19,378 Extraordinary gain (loss) from debt extinguishment (1,761) -- 71 -- --------- --------- --------- --------- Net income (loss) (53,713) (36,654) (5,969) 19,378 Dividends on preferred and preference stock (4,275) (4,275) (12,826) (12,826) --------- --------- ---------- --------- Net income (loss) attributed to common shares $ (57,988) $ (40,929) $ (18,795) $ 6,552 ========= ========= ========= ========= Weighted average common shares outstanding (shares used to calculate basic EPS) 66,572 65,812 66,441 65,730 Stock options and other stock awards -- -- -- 169 --------- --------- --------- --------- Shares used to calculate diluted EPS 66,572 65,812 66,441 65,899 ========= ========= ========= ========= Basic and diluted earnings per common share: Before extraordinary item $ (.84) $ (.62) $ (.28) $ .10 Extraordinary item (.03) -- .00 -- --------- --------- --------- -------- Net income (loss) $ (.87) $ (.62) $ (.28) $ .10 ========= ========= ========= ========
The assumed conversions to common stock of the Company's 7% convertible subordinated debentures, preferred and preference stock, stock options and other stock awards 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 Nine Months Ended September 30, September 30, --------------------- ------------------------ 2000 1999 2000 1999 --------- ---------- ----------- ----------- Net sales Fresh Produce $ 363,696 $ 439,769 $ 1,375,418 $ 1,570,848 Processed Foods 102,077 127,469 349,873 366,249 ---------- ---------- ----------- ----------- $ 465,773 $ 567,238 $ 1,725,291 $ 1,937,097 ========== ========== =========== =========== Operating income (loss) Fresh Produce $ (31,502) $ (20,213) $ 68,415 $ 80,766 Processed Foods 7,716 5,907 19,632 18,323 ---------- ---------- ----------- ----------- $ (23,786) $ (14,306) $ 88,047 $ 99,089 ========== ========== =========== =========== Segment operating income (loss) for the third quarter of 1999 excludes $6 million of charges resulting from a workforce reduction program. Inventories (in thousands) - ------------------------- September 30, December 31, September 30, 2000 1999 1999 -------------- -------------- ------------ Fresh produce $ 32,416 $ 39,762 $ 36,918 Processed food products 249,699 215,365 232,186 Growing crops 98,009 104,699 110,423 Materials, supplies and other 62,403 61,980 58,630 -------------- -------------- ------------ $ 442,527 $ 421,806 $ 438,157 ============== ============== ============
Hedging - ------- Chiquita has a long-standing policy of periodically hedging transactions denominated in foreign currencies. At September 30, 2000, the Company had euro-denominated option contracts which ensure conversion of approximately euro 45 million of sales in 2000 at rates not lower than 0.88 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 40 million of sales in 2000 and approximately euro 270 million of sales in 2001 at rates not lower than 0.88 dollars per euro. The carrying value of these option contracts at September 30, 2000 was approximately $8 million and their fair value based on quoted market prices was approximately $10 million. In addition, the Company realized gains of $13 million on the early termination of certain option contracts during the second and third quarters of 2000. At September 30, 2000, approximately $4 million of these gains have been recognized in income, and the remaining $9 million will be recognized in income in the fourth quarter of 2000 and in 2001 based on the original maturity dates of the terminated option contracts. 7 Accounting Pronouncements - ------------------------- In 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging Activities." This standard, which must be implemented for the Company's 2001 fiscal year, requires the recognition of all derivatives on the balance sheet at fair value, and recognition of the resulting gains or losses as adjustments to net income or other comprehensive income. The Company is currently evaluating the impact of SFAS No. 133 on its consolidated financial statements. The adoption of this standard could increase the likelihood of volatility in earnings and other comprehensive income, the extent of which is dependent upon the amount of derivatives outstanding and the timing and size of foreign exchange rate fluctuations. Comprehensive Income (Loss) - -------------------------- Comprehensive income (loss) for all periods presented consisted solely of net income (loss) and unrealized foreign currency translation gains (losses), as follows (in thousands):
Quarter Ended Nine Months Ended September 30, September 30, ----------------------- ---------------------- 2000 1999 2000 1999 ---------- ---------- --------- ---------- Net income (loss) $ (53,713) $ (36,654) $ (5,969) $ 19,378 Unrealized foreign currency translation gains (losses) (3,278) 2,954 (7,295) (4,230) ---------- ---------- --------- ---------- Comprehensive income (loss) $ (56,991) $ (33,700) $ (13,264) $ 15,148 ========== ========== ========= ==========
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 is no longer consolidated but 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 which were subsequently collected in October 2000. 8 Item 2 - ------ CHIQUITA BRANDS INTERNATIONAL, INC. ---------------------------------- MANAGEMENT'S ANALYSIS OF ------------------------- OPERATIONS AND FINANCIAL CONDITION ---------------------------------- Operations - ---------- The Company incurred an operating loss of $24 million for the third quarter of 2000 compared to a 1999 third quarter operating loss of $20 million. For the nine months ended September 30, 2000, operating income was $88 million compared to $93 million for the nine months ended September 30, 1999. In 2000, the Company's results have been negatively affected by the strongest dollar in relation to major European currencies in the last 14 years. This results in fewer U.S. dollars from the Company's European sales (mitigated in part by the Company's foreign currency hedging program). Additionally, the Company's results have been adversely affected by higher fuel costs and lower banana volume in North America. The negative effects of these items have been partially offset by the Company's continued improvements in the production and logistics costs of its Fresh Produce business and benefits from its workforce reduction program announced in the third quarter of 1999. Operating results for the Company's Processed Foods business segment improved from the prior year as the Company continued to consolidate productive capacity in its canning operations. On a local currency basis, banana prices in 2000 have remained comparable to 1999. However, local banana prices in both years have been lower than in preceding years as the industry continues to experience an oversupply of bananas. Operating income for the nine months ended September 30, 2000 also includes charges and write-offs relating primarily to banana production assets. This includes the curtailment announced in June 2000 of additional Hurricane Mitch farm rehabilitation. 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. Operating income for both the quarter and nine months ended September 30, 1999 includes $6 million of workforce reduction charges. Net sales for the quarter and nine months ended September 30, 2000 decreased $101 million and $212 million from the corresponding periods in 1999 primarily as a result of the stronger dollar, lower banana volume in North America and the deconsolidation of the Company's Australian operations. Net interest expense increased in the first nine months of 2000 over the prior year as a result of higher average outstanding debt balances and $10 million of interest income on tax refunds recorded in the 1999 third quarter. 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 - ------------------- Approximately $145 million of debt matures in the first quarter of 2001, composed primarily of the Company's 7% subordinated debentures and a bank loan to certain Costa Rican farm subsidiaries. The Company presently intends to satisfy these obligations and its seasonal working capital needs both with available cash and by obtaining additional financing. Additional financing may include a new revolving credit facility to replace the Company's $110 million revolving credit facility that expires in January 2001 and/or other issuances of securities. However, even if the Company is able to obtain these financings on satisfactory terms, further deterioration in industry conditions or in the euro exchange rate could adversely affect the Company's ability to repay the $145 million of first quarter 2001 obligations. 9 The Company is in discussions with financial institutions regarding a new revolving credit facility. The Company's current revolving credit facility has been used primarily for working capital purposes, with highest amounts typically drawn during the first half of the year. During 2000, the highest balance outstanding under this revolver was $42 million at March 31, 2000. At October 31, 2000, no borrowings were outstanding under this facility. At October 31, 2000, approximately $50 million of additional borrowings were available to subsidiaries for working capital purposes under other committed lines of credit. As previously announced, the Company will not declare or pay any further dividends on any of its outstanding preferred and preference stock until conditions improve. This includes the $2.875 Non-Voting Cumulative Preferred Stock, Series A, $3.75 Convertible Preferred Stock, Series B, and $2.50 Convertible Preference Stock, Series C. Dividends on these series, which total $17 million annually, will continue to accrue, in accordance with the terms of these shares. The Company is not permitted, under the terms of the preferred shares, to pay dividends to common shareholders until preferred dividends in arrears have been fully paid. During the first nine months of 2000, capital expenditures of $46 million included approximately $18 million to rehabilitate farms in Honduras and Guatemala which were destroyed or damaged by Hurricane Mitch in late 1998. International - ------------- As previously described in the Company's 1999 Annual Report to Shareholders under "Management's Analysis of Operations and Financial Condition - European Union Regulatory Developments" and in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, 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. In May 2000, the President of the United States signed into law a measure which could increase pressure on the EU to make its banana regime consistent with World Trade Organization ("WTO") rulings. 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 still considering how to implement that requirement. On October 4, 2000, the European Commission approved the broad outline of a "first come, first served" proposal that would continue to limit access for Latin American bananas and involve the "pre-allocation" of licenses based on the chronological order of applications and other criteria. It is not known whether the European member states will approve that proposal. The United States and Latin American producing countries have opposed this proposal and have informed the EU of their view that the "first come, first served" proposal would not be WTO consistent. Uncertainties remain as to the outcome of this dispute and its effect on the Company and the banana industry as a whole. 10 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 September 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. Part II - Other Information - --------------------------- 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 September 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) November 13, 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 nine months ended September 30, 2000 and is qualified in its entirety by reference to such financial information. 9-MOS DEC-31-2000 SEP-30-2000 109,965 0 194,634 9,746 442,527 861,251 1,840,855 738,777 2,472,443 584,984 1,057,382 0 253,475 666 430,031 2,472,443 1,725,291 1,725,291 1,369,059 1,369,059 68,122 0 95,552 1,960 8,000 (6,040) 0 71 0 (5,969) (.28) (.28)
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