-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ZiFRygkZicK46P7On1wipXVaCoqkxF9Bcq3t6SxGwRy3jO4O+2YBLeZ9VoPaBUrh +XTyvh9u23zmBxTmFO9W0Q== 0000101063-94-000051.txt : 19941116 0000101063-94-000051.hdr.sgml : 19941116 ACCESSION NUMBER: 0000101063-94-000051 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: AMEX SROS: BSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHIQUITA BRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0000101063 STANDARD INDUSTRIAL CLASSIFICATION: 2011 IRS NUMBER: 041923360 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01550 FILM NUMBER: 94559455 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 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, 1994 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) 784-8011 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 November 1, 1994, there were 49,093,044 shares of Common Stock outstanding. Page 1 of 13 CHIQUITA BRANDS INTERNATIONAL, INC. TABLE OF CONTENTS Page PART I - Financial Information Consolidated Statement of Income for the quarters and nine months ended September 30, 1994 and 1993 . . . . . 3 Consolidated Balance Sheet as of September 30, 1994, December 31, 1993 and September 30, 1993. . . . . . . . . . . . . . . . . . . 4-5 Consolidated Statement of Cash Flow for the nine months ended September 30, 1994 and 1993 . . . . . . . . . . . 6 Notes to Consolidated Financial Statements . . . . . . . . 7 Management's Analysis of Operations and Financial Condition . . . . . . . . . . . . . . . . . . 8-10 PART II - Other Information Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . 10 Item 6 - Exhibits and Reports on Form 8-K. . . . . . . . . 10-11 Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 PAGE Part I - Financial Information CHIQUITA BRANDS INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF INCOME (In thousands, except per share amounts) (Unaudited)
Quarter Ended Nine Months Ended September 30, September 30, 1994 1993 1994 1993 Net sales $557,414 $552,329 $1,879,492$1,965,790 Operating expenses Cost of sales 495,250 438,102 1,449,864 1,520,718 Selling, general and administrative 80,425 77,353 243,313 246,122 Depreciation 26,630 25,735 79,890 75,484 602,305 541,190 1,773,067 1,842,324 Operating income (loss) (44,891) 11,139 106,425 123,466 Interest income 4,731 5,221 15,458 17,512 Interest expense (41,160) (42,216) (125,558) (126,612) Other income, net 668 1,588 3,002 5,969 Income (loss) from continuing operations before income taxes (80,652 ) (24,268) (673) 20,335 Income taxes -- (1,600) (13,500) (11,000) Income (loss) from continuing operations (80,652) (25,868) (14,173) 9,335 Discontinued operations -- -- -- -- Income loss before extraordinary item (80,652 ) (25,868) (14,173) 9,335 Extraordinary loss from prepayment of debt -- -- (22,840) -- Net income (loss) $(80,652) $(25,868) $ (37,013)$ 9,335 Weighted average number of common shares outstanding (see Exhibit 11) 52,054 51,404 51,939 51,621 Primary and fully diluted earnings (loss) per common share: - Continuing operations $ (1.59) $ (.50 ) $ (.37) $ .18 - Extraordinary loss -- -- (.44) -- - Net income (loss) $ (1.59) $ (.50 ) $ (.81) $ .18 Cash dividends declared per common share $ .05 $ .05 $ .15 $ .39
PAGE CHIQUITA BRANDS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEET (In thousands) (Unaudited)
ASSETS September 30,December 31, September 30, 1994 1993 1993 Current assets Cash and equivalents $151,292 $151,226 $194,820 Trade receivables, less allowances of $12,135, $11,051 and $9,492, respectively 223,723 187,936 200,958 Other receivables, net 95,450 85,170 73,698 Inventories 318,765 307,073 320,601 Other current assets 33,367 39,054 34,655 Total current assets 822,597 770,459 824,732 Restricted cash 69,592 51,020 48,020 Net assets of discontinued operations 38,410 42,41042,410 Property, plant and equipment, net 1,433,196 1,427,191 1,442,978 Investments and other assets 294,160 282,914 279,576 Intangibles, net 157,969 166,759 184,182 $ 2,815,924 $2,740,753$ 2,821,898
PAGE CHIQUITA BRANDS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEET (continued) (In thousands, except share amounts) (Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY September 30, December 31, September 30, 1994 1993 1993 Current liabilities Notes and loans payable $115,042 $112,796 $114,298 Long-term debt due within one year 89,182 79,411 75,668 Accounts payable 216,785 202,923 198,404 Accrued liabilities 111,697 108,536 134,396 Total current liabilities 532,706 503,666 522,766 Long-term debt of parent company 840,251 881,124 880,737 Long-term debt of subsidiaries 553,963 557,254 558,400 Accrued pension and other employee benefits 75,037 74,588 72,209 Other liabilities 119,299 122,123 124,786 Total liabilities 2,121,256 2,138,755 2,158,898 Shareholders' equity Preferred stock, Series A (2,875,000 shares outstanding) 138,369 -- -- Preference stock, Series C (648,310 shares outstanding) 52,270 52,270 52,270 Capital stock, $.33 par value (48,893,012, 48,510,353 and 48,242,090 shares outstanding, respectively) 16,298 16,170 16,081 Capital surplus 500,553 494,240 491,433 Retained earnings (deficit) (12,822) 39,318 103,216 Total shareholders' equity 694,668 601,998 663,000 $ 2,815,924 $2,740,753$ 2,821,898
PAGE CHIQUITA BRANDS INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF CASH FLOW (In thousands) (Unaudited)
Nine Months Ended September 30, 1994 1993 Cash provided (used) by: Operations Income (loss) from continuing operations $(14,173) $ 9,335 Depreciation and amortization 84,633 80,885 Write-downs of farms and cultivations 24,600 -- Changes in current assets and liabilities Receivables (36,914) (1,593) Inventories (16,536) 28,586 Accounts payable and accrued liabilities 16,823 (31,250) Other current assets and liabilities 5,674 (3,984) Other 2,272 (5,160) Cash flow from operations 66,379 76,819 Investing Capital expenditures (115,790) (174,185) Restricted cash deposits (18,572) (48,020) Acquisitions and long-term investments (386) (45,206) Decrease in marketable securities -- 25,212 Proceeds from sale of ships and equipment -- 22,000 Other (6,944) (1,102) Cash flow from investing (141,692) (221,301) Financing Debt transactions Issuances of long-term debt 263,745 121,769 Repayments of long-term debt (326,208) (108,481) Increase (decrease) in notes and loans payable 4,159(23,904) Stock transactions Issuance of preferred stock 138,369 -- Dividends (11,928) (20,922) Net issuances (repurchases) of capital stock 3,242(394) Cash flow from financing 71,379 (31,932) Discontinued operations 4,000 (16,735) Increase (decrease) in cash and equivalents 66 (193,149) Balance at beginning of period 151,226 387,969 Balance at end of period $151,292 $194,820
PAGE 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, 1993 for additional information relating to the Company's financial statements. Inventories consisted of the following (in thousands):
September 30, December 31, September 30, 1994 1993 1993 Bananas and other fresh produce $ 44,498 $42,918$ 38,266 Other food products 74,167 56,043 75,639 Growing crops 115,208 117,839 114,563 Materials and supplies 71,630 75,206 77,203 Other 13,262 15,067 14,930 $318,765 $307,073 $320,601
In February 1994, the Company completed the sale of $175 million principal amount of 9-1/8% Senior Notes due 2004 and 2,875,000 shares of $2.875 Non-Voting Cumulative Preferred Stock, Series A. The net proceeds from the offerings totaled approximately $310 million. In March, most of these proceeds were used to prepay all of the outstanding principal amount of the Company's 11-7/8% Subordinated Debentures ($125 million), 10-1/4% Subordinated Debentures ($42 million), 9-1/8% Subordinated Debentures ($18 million) and a portion ($45 million principal amount) of its 10-1/2% Subordinated Debentures. These prepayments resulted in an extraordinary loss of $22.8 million, consisting primarily of write-offs of unamortized discounts and $5 million of call premiums. In accordance with its long-standing policy to periodically hedge transactions denominated in foreign currencies, at September 30, 1994, the Company had foreign exchange forward contracts to ensure conversion at an average exchange rate of 1.71 Deutsche mark for each U.S. dollar of approximately $90 million of foreign sales commitments for the fourth quarter of 1994. The fair value of these contracts, based on quoted market prices, was approximately $9 million at September 30, 1994. In addition, at September 30, 1994, the Company had foreign exchange forward contracts to ensure conversion at an average exchange rate of 1.54 Deutsche mark for each U.S. dollar of approximately $95 million of foreign sales in the first half of 1995. The fair value of these contracts, based on quoted market prices, was not significant. PAGE CHIQUITA BRANDS INTERNATIONAL, INC. MANAGEMENT'S ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION OPERATIONS Net sales for the quarter ended September 30, 1994 were comparable to sales for the same quarter of 1993. For the third quarter the Company incurred an operating loss of $45 million in 1994 as compared with operating income of $11 million a year ago. The 1994 quarter included charges and losses totaling $57 million primarily resulting from the following business developments: o the shutdown of over 1,200 hectares of low productivity Honduran banana farms following an unusually severe strike and, at the Company's remaining Honduran farms, the chopback of cultivations weakened during the strike. The Company undertook these extraordinary measures to optimize the future economic yield and quality of its Honduran banana production. Chiquita expects to recommence banana exports from its Honduran farms around year-end. o the substantial reduction of the Company's Japanese "green" banana trading operations. Poor local market conditions, and the desire to eliminate related losses, contributed to the Company's decision to significantly scale back this portion of its business. Chiquita will remain active in the Japanese banana market primarily through its existing banana ripening and distribution operations. Write-downs associated with the Honduran farms and cultivations were approximately $25 million. Shut-down costs (principally workforce severance and facility closures) and operating losses associated with the scaled-back Japanese "green" banana trading business aggregated approximately $13 million. An additional $18 million of the third quarter charges and losses are related to excess shipping capacity caused in part by the scale-back of Japanese "green" banana trading operations. This portion of the third quarter loss represented provisions for losses on sale of owned ships, subchartering or idling of other ships and unrecovered shipping costs incurred during the quarter. Net sales for the nine-month period declined $86 million (4%) from the prior year level. Approximately one-half of the effect of lower volumes on revenue was offset by the effect of a higher average worldwide banana price. Nine-month operating income declined to $106 million, versus $123 million in 1993, reflecting the impact of the third quarter business developments discussed above, the effect of lower first half volumes on operating income and the benefit of a higher average banana price. Net interest costs for the quarter and nine months were relatively unchanged as the effect of lower average borrowings outstanding was partially offset by lower capitalization of interest costs and lower interest income. PAGE The effective tax rate is affected by the level and mix of income between various domestic and foreign jurisdictions in which the Company operates. FINANCIAL CONDITION Cash was $151 million at both September 30, 1994 and December 31, 1993. Proceeds from new parent company financings during the first quarter were used primarily to retire higher cost debt. Nine-month capital expenditures of $116 million include $68 million for the deliveries of new ships and equipment ordered in prior years, completing the Company's multi-year investment spending program. Approximately 80% of these shipping related expenditures were externally financed. Cash provided by operations, $66 million, exceeded normal capital expenditures, $48 million, by $18 million. DISCONTINUED OPERATIONS During the first quarter of 1994, the Company's Meat Division sold its specialty meat operations for approximately $50 million in cash and used the proceeds primarily to reduce short-term borrowings. In March, the Meat Division made a scheduled payment of $4 million on its secured debt held by Chiquita and subsequently retired substantially all of the remaining $13 million of this secured debt in exchange for a new preferred equity interest. During the first nine months of 1994, the Meat Division continued to produce improved operating profits (which are not included in Chiquita's consolidated results of operations) on approximately $1.1 billion in net sales. In October 1994, the Company received a favorable Federal Circuit Court of Appeals ruling that reconfirms its right to unilaterally reduce medical benefits of retired hourly employees. The union may seek further judicial review of this decision. OTHER As previously disclosed, on July 1, 1993, the EU implemented a new quota effectively restricting the volume of Latin American bananas imported into the EU, which had the effect of decreasing the Company's market share in Europe. In two separate rulings, General Agreement on Tariffs and Trade ("GATT") panels found this banana policy to be illegal. In March 1994, four of the countries which had filed GATT actions against the EU banana policy (Costa Rica, Colombia, Nicaragua and Venezuela) reached a settlement with the EU by signing a "Framework Agreement." The Framework Agreement authorizes the imposition of additional restrictive and discriminatory quotas and export licenses on U.S. banana marketing firms, while leaving EU firms exempt. If implemented, the Framework Agreement and related regulations could significantly increase the Company's cost to export Latin American bananas to the EU. Four additional European countries (Norway, Sweden, Finland and Austria) may join the EU in the first half of 1995. These countries, which have had substantially unrestricted banana markets in which Chiquita has supplied a significant portion of the bananas, would then be subject to the quota and licensing regulations and the quota could be increased. However, the timing and exact nature of any adjustments in the quota and licensing regulations that might be made if these countries join the EU have not yet been determined. PAGE On September 2, 1994, the Company and the Hawaii Banana Industry Association made a joint filing with the Office of the U.S. Trade Representative under Section 301 of the U.S. Trade Act of 1974, charging that the EU quota and licensing regime and the Framework Agreement are unreasonable, discriminatory and a burden and restriction on U.S. commerce. In October 1994, in response to this petition, the U.S. Government initiated a formal investigation of the EU banana import policy and has officially advised the governments of Costa Rica, Colombia, Nicaragua and Venezuela that if they act to implement the Framework Agreement, or any alternative measures that are unreasonable or discriminatory, those governments will be immediately included in the Section 301 action. Section 301 authorizes the U.S. Government - unless satisfactory relief from unfair practices is forthcoming - to take retaliatory measures such as tariffs or withdrawal of trade concessions against the offending countries. However, there can be no assurance as to the results of the investigation, the nature and extent of actions the U.S. Government might take, or the impact on the EU quota regime or the Framework Agreement. Part II - Other Information Item 1 - Legal Proceedings Reference is made to Part I, Item 1 - "Business-Discontinued Operations-Labor Relations" in the Company's 1993 Form 10-K which discusses several labor cases pending against John Morrell & Company ("Morrell"). See also Part I - "Management's Analysis of Operations and Financial Condition - Discontinued Operations" in this report on Form 10-Q. In the matter of the suit brought in January 1984 by certain workers relating to the closing and later reopening of one of the Meat Division's plants, on September 23, 1994, the lower court decision dismissing all cross-claims against Morrell and Chiquita was affirmed by the Sixth Circuit Court of Appeals. In the matter of the third lawsuit resulting from a May 1987 strike at Sioux Falls, Morrell and the union agreed to a settlement of the matter in early October 1994. The agreement is subject to approval by the affected workers, which is currently being sought. The settlement would require Morrell to make individual payments to affected workers which could aggregate up to $2.3 million. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibit 11 - Computation of Earnings Per Common Share. . . . . . Page 13 Exhibit 27 - Financial Data Schedule . . . . . . . . . .** ** Copy omitted from this Quarterly Report on Form 10-Q. Copy included in report filed electronically with the Securities and Exchange Commission. PAGE (b) The follo wing repor t on Form 8-K was filed by the Compa ny durin g the quart er ended September 30, 1994: September 2, 1994 - to report the Company's and Hawaii Banana Industry Association's joint filing with the Office of the U.S. Trade Representative under Section 301 of the U.S. Trade Act of 1974, charging that the EU quota and licensing regime and the Framework Agreement are unreasonable, discriminatory and a burden and restriction on U.S. commerce. PAGE 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 14, 1994 EX-11 2 Exhibit 11 CHIQUITA BRANDS INTERNATIONAL, INC. COMPUTATION OF EARNINGS PER COMMON SHARE (In thousands, except per share amounts) (Unaudited)
Quarter Ended Nine Months Ended September 30, September 30, 1994 1993 1994 1993 Income (loss) from continuing operations $ (80,652) $(25,868)$(14,173)$ 9,335 Dividends on Series A Preferred Stock (2,066) -- (5,166)-- Income (loss) from continuing operations available to common shares (82,718)(25,868) (19,339) 9,335 Discontinued operations -- -- -- -- Income (loss) before extraordinary item (82,718) (25,868) (19,339)9,335 Extraordinary loss from prepayment of debt -- -- (22,840)-- Net income (loss) used to calculate primary and fully diluted earnings (loss) per share $(82,718) $(25,868)$(42,179)$ 9,335 Shares used in calculation of per share data: Weighted average common and equivalent Series C preferred shares outstanding 52,054 51,404 51,939 51,393 Dilutive effect of assumed exercise of certain stock options and warrants -- -- -- 228 Weighted average common shares used to calculate primary and fully diluted earnings (loss) per share 52,054 51,404 51,939 51,621 Primary and fully diluted earnings (loss) per common share: - Continuing operations $ (1.59)$ (.50) $ (.37) $ .18 - Extraordinary loss -- -- (.44) -- - Net income (loss) $(1.59) $ (.50)$ (.81) $ .18
EX-27 3
5 The schedule contains summary financial information extracted from the Chiquita Brands International, Inc. Form 10-Q for the quarterly period ended September 30, 1994 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1994 SEP-30-1994 151,292 0 235,858 12,135 318,765 822,597 1,964,682 531,486 2,815,924 532,706 1,394,214 16,298 0 190,639 487,731 2,815,924 1,879,492 1,879,492 1,449,864 1,449,864 79,890 0 125,558 (673) 13,500 (14,173) 0 (22,840) 0 (37,013) (.81) (.81) Amounts include an extraordinary loss of $.44 per share resulting from the prepayment of debt in the first quarter.
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